Yes, I agree with you synopsis and feel that unless we can get this house under contract for way below their asking price ie. 160-170 range .. this is a no deal.

They are just doing their job responding to the complaints, so treat them with respect.

This seems like exactly what I'm looking for in the area I'm looking and my price range, however the calculator is telling me it's a bad deal.

There are a slew of people on BP, ranging from very conservative to very risky investors...but you have picked a good forum through which to educate yourself.Since you are not desperate, don't let anyone talk you into hasty decision. 

Market Comps in the historic area of town (.5 mile radius of subject property) range from $450-$575 for 1 Bed 1 Bath.     

In that range, at least in the Boston area you could potentially purchase a 10+ unit building in a decent area.Personally I would look at a very good area, like Boston, or a larger complex in the southeast.

When investing with a partner other than my wife, it must be in an LLC and the loan would also be to the LLC, and then my business partner and I would split ownership of that LLC based upon our respective input and responsibilities (which may or may not be 50/50).I'm not comfortable owning any investment property in my personal name (although I do have a few), but I certainly would not do so with a business partner...

I'm a general contractor specializing in remodels and renovations of mid-range residential properties for rent and resale.

Without that, there is no legally binding, enforceable contract.Assuming you do have a written contract, it should say in the contract how long you have for inspections and what rights you have with respect to entering/inspecting the property. 

My taxes are more in the $500-550 range and insurances is a little over $100 per month.