Examples: *Duplexes with rent potentials of $1,500 per unit selling in the $500-700k range*Quads with rent potentials of $800 per unit selling for $500k+ (that need about $80k in repair)...I mean just quick 1% rule would make me RUN from this type of property...right?

The only concern I would have is that it was originally an ALF but was converted into apartments so that suggests that the market could not support the business as running an ALF can be costly.

@Glenn English pretty standard rule in most of the country.

Specific rules apply under such transaction, however.

I’d assume there’d be additional documentation to support this “transfer.”Should I ask for any additional documentation?  

well instead of checking with folks on the internet why don't you call your state agency that controls lending and ask them what are the rules.. every state is different just because some one is doing it in antoher state makes no matter if its not legal in your state..

When they told me how much they wanted, I felt they were a little optimistic with their asking price and their estimated rehab budget, but after a few rounds of negotiating over text, we agreed on a price that was $15k under their original asking.The numbers were:Purchase price: 80kseller repair estimate: 35kARV: 180k to 195kMy hard money lender would only lend up to 65% of the ARV and they chose to go with a conservative number at $175k, so based the 65% rule I had to be all in at $117, so that gave me a budget of $37k. 

Then just take whatever the professional clean-up company charges you and bill that to the company with all the supporting evidence.

During the inspection we did not find signs of water leakage but I will be able to see more when I remove the wood tomorrow, so am not ruling that possibility out completely.  

You also want to make sure your profit margins are big enough to support a large market shift.