I think that might be what I have to do to ensure it doesn't get thrown out over a partial payment technicality, what do you all think? 

It must be hired work with an itemized receipt.While the tenants did seem to be a little rough on the property, this stuff can be fairly standard.

When I already have a client who knows and trusts me, I know they can act quickly on a deal and will treat me fairly during the transaction. 

The charges for preparing and posting notice, filing for court date, etc are all part of tenant financial responsibility as per lease.Be fair but firm and treat EVERYONE equally, regardless of stories/excuses they try to provide. 

The Roof, water tank, and HVAC are fairly new.  

If this was a 50k house and you wanted to pay 50k and the seller wanted 60k that’s a fairly substantial gap.

Always fair. 

You'd want the interest rate on the 2nd loan (Wrap Loan) to be higher than the interest you are paying the seller to ensure you are making some interest income via the spread of some kind.You can also ask for some kind of downpayment.   

I know of an investor who uses that strategy regularly and does fairly well.

Much of the cost of renovating the unit will be borne by me, and a fair amount will be now covered by insurance; the carpets have burn marks, the walls have got large brown areas, doors have been kicked in, there will be lost rent due to re-hab.