Also how much should you over estimate on every project for unforseen issues that may accrue?

I'd get a quote for how much it would cost to sub-meter the water and estimate how much money you will save (you should be able to get the historical water costs) to calculate an ROI.

I am in the process of purchasing my first property and I really under-estimated the insurance cost... 

If you only want an estimate, I am not sure he will help.

The total estimated cost is $800,000.

I don't know any details on your rents, costs, area, NOI or any other details, so not weighing in if you should buy or not. 

In other words, if they have no proof, but you do, then you win as most states have landlord/tenant law that favors the tenant.As was stated above, keep your small claims court date and be prepared to take your proof, as well as a VERY detailed account of everything you can remember from conversations and other occurrences between you and the landlord, or the landlord's rep, to court with you.In Colorado, for example, the landlord must return the deposit in full, or issue a check and a detailed statement covering the amounts not returned, within 30 days. 

I would either charge the tenant 40% of the monthly utility bills or get a estimate of a full past years utility costs and increase the tenants rent by 50% of that cost.

List price: $155k  Zestimate: $160k Rental Estimates: $1000-1200Offer Strategy 1: Subject To (depending on what I find out about underlying debt, payment and willingness to keep mortgage in their name)Offer Strategy 2: Lease Option (with right to sublet)Offer Strategy 3: Wrap Mortgage (then after seasoning connect them with a note purchaser if the wrap could be setup in a marketable way where this works for the seller and note buyer)Thoughts?

My tenant asked for additional insulation and gave an estimate of $225.00.