They went to a coding boot camp and now work in IT, and I searched high and low for some sort of job that wouldn't make me tear my hair out and landed in the finance world.

Just looked at a property today that we'd really love to buy, tear down and rebuild.The numbers almost make sense at a high level but I'm more curious about the financing strategy (costs) for such a deal...We would like to put in an offer at $400k.

So old age, wear/tear, or minor items (leaks) usually don't warrant them paying for a full roof replacement.Best thing to do, is to find a good "local" roofing person/company, that can be trusted to tell you HONESTLY if there is hail damage (after storms), or is able to do the small repairs. 

I don't have personal experience with this, but some initial thoughts:ADVANTAGESCould be a longer term tenant than a normal tenant.Meeting a much needed housing and service shortage.Should be able to charge a premium rate compared to traditional renting.DISADVANTAGESInsurance could be significantly higher, to have any business but especially a business with more risk of falls.More wear and tear on the property with likely more occupants and maybe more damage.Guessing a lot of these businesses don't survive, it's harder than people think it is.Potential added expenses to accomodate business use, handicap access, potential commercial kitchen set-up, etc.

Furnaces usually start having problems before they stop working, and there are telltale signs of wear and tear. 

It's been abused by firefighters walking thru it after while fighting a fire, the construction company tearing down the ceiling, some paint from the ceiling being painted and all had do to was sweep it up, mop and slap some mop and glo on it and they looked like the day I put them in.

I have walked plenty to know most are just tear-downs and you will be throwing your many in a black hole.

What concerns me is that he will most likely tear down the home currently, split the lots (they are already subdivided), and then begin construction on two new homes.   

I have to tear down the basement ceiling for several reasons so the floor joists will be exposed.My question is for when I go to have it appraised will the new wiring make up the cost of the investment in new wiring?

First, you can't charge tenants for "ordinary wear-and-tear" and it sounds like that's what your manager is telling you.