This is my opinion only. 

I thought this was not supposed to be possible?

This resulted in approximately 600,000 gallons of water wasted and nearly $12,000 water bill over the course of 2 months.

Yes, I have seen a good number of deals like this.

This would require seller to bring cash to closing.

Hi Mary,It is true the lender will not usually give you the rehab funds in advance, but this does not mean that you must complete all of the rehab out of pocket.

I thank God for my 20 years of experience in real estate What made you interested in investing in this type of deal?

Google search gives me these super wide ranges and mostly talking about adding a bedroom in a SFH, which I'm not sure if applicable to this situation of "moving/subtracting a bedroom from one unit and add it to another unit in a duplex". 

Now I'll lurk on the site until I have something to contribute. 

As @Max Yuan stated, this is a numbers game.