Be very careful this could possibly not be a squirrel problem but a property management problem, trying to create extra revenue

Stick to your numbers and if it doesn't make sense walk away because trust me, there are plenty of deals out there you just have to put in extra work in this sellers market.

I comped houses with similar square feet and found theres enough sq feet for 2 additional bedrooms, potentially hitting the 352k range. owned the property for a little over a year, with a 50k downpayment. original loan = 333kfinanced = 281kcurrent value = 340k (according to his loan officer)Ive ran it through the usual 70-80% formulas but wanted some extra opinions/ weigh ins before i send him my offer. of course i dont want to insult him, being family and all, but he understands the convenience factor im providing.

BTW, i have extra liability insurance, due to no LLC protection.

I want to be proactive for next time, I thinking of budgeting 20% extra on top of the estimate to cover myself from them.

Given you are in Milwaukee where I would assume home prices are still reasonable, you could buy 5 rental properties that would cash flow ~$250 a month each or an extra $15,000 a year total.

As I understand it, if the MIL was damaged or burned down, we would not be able to rebuild it. 

I have a park with some extra land, I can explore this idea too. 

Should I ask the bank for an extra amount (maybe 1.5x my estimated repair costs) to cover for incidentals? 

if you want to just blow tons of extra money and do it that way you can or you can be a little bit smarter and avoid all that.