What are the risks and based on the numbers and other factors (described above), should I even do this project?

Do you think this factor can be a deal breaker when I am searching for potential rental properties? 

There are a lot of factors that go into a good investment, and while the market is critical a provider can make or break your investment.  

I factor in 5-10% for repairs and maintenance in my head though.

Then there's another factor: I still live with my folks, who are of the more fiscally conservative variety.

With access restricted by seller...Are any of you still able to work with your lender on an external BPO?

The determining factor for whether or not the bankruptcy is going to matter is if the bankruptcy was filed before or after the property was struck off at auction. 

don't remember) of current tenants must agree to purchase their unit.2) The price will be high, because the landlord is going to factor in the costs of the condo-conversion (it will cost the landlord 100-300k for a smaller building).3) The landlord cannot vacate the building to convert to condos.

A couple of issues that I had not originally factored (shame on me) were: Sprinkler system requirements, upgrading water and sewer connections for much higher capacity, upgrading electric and gas (plus meters) for higher capacity.

What I still can't understand is: Was the wife being an ex-broker a factor in this equation?