I don't think vacancy, repairs, maintenance, etc. has factored into the equations yet.Priniciple, Insurance, Taxes, and Interest on a $307,500 loan should come out to a few shades under $2,000/month, I think that he is counting the rest as cash flow.

The previous owner must have been upset about his/her loss because there were holes in almost every wall, lights pulled from the ceiling, appliances damaged, etc. 

As Tony mentioned, once you know that the roof would be covered, you need to know how a loss will be paid.  

Tax free Gains after taking in losses from depreciation, while also reducing taxes on another taxable ‘like’ income

You want to consider retail price for rehab costs because of you get hurt the day after closing and need to hire someone to do the work you will be at a loss if you didn’t calculate rehab at retail price. 

Most of our renters are professional people either looking to save money, stay flexible or recover from divorces, job losses or health issues.

And if you notice the market is starting to decline, don't hesitate to get out quickly, even if it means taking a loss on whatever you're currently holding.Obviously, having additional exit strategies are important as well, but as a full-time rehabber, it's not going to be realistic that every rehab deal will make a great rental.

Insurance is an issue in these transactions, you can make a buyer an additional insured, you can assign loss proceeds to a buyer with the insurance company, they have assignment forms.

While starting out you may not have many assets, but doesn't it still make sense to form an LLC (for ~$100) in order to protect yourself and offset losses for tax purposes?

Something you might take away from your experience is that, despite a hard loss, it appears you possess a natural interest and affinity for this business.