We ended up talking to the second foundation guy and he said it would be ok but the doors wouldn't shut or the cracks go away.

Is the $2000 savings enough reward if the city shuts you down mid-repair?

.. and be open and willing to shut up, listen and think before they  immediately act. 

When the bank was brought into the equation the deal was shut down and I believe he will be pursuing a short sale instead now.What does this mean for me and my offer?  

In addition, he shut the water and electricity off.

It's in the woods where temperatures can freeze, so it's very common for people to shut off the water to the home if they are going to be away for any period of time.

Currently, in my town, there is a HUGE debate about this, and the city may shut down vacation rentals which aren't licensed.

Ask your brain how can I do this, instead of shutting down your thought process with a declarative statement of " I can't do this" and then you fill in all the reasons why.

And I was told to stay away from Watertown for buy and hold because you never know what will happens if the base ever shuts down however I work there and that's the one I've been having great connections with (agent, apprasier, etc.). 

But do it for both units, not just the one with the water shut off.