I do know the sellers, so of course have talked with them, but I wanted to also get a more objective and investor oriented perspective.

If I purchase it from him with cash after he has only held it for 1 week, rehab the house then get a cash out refi, will there be any problems/objections by the lender?  

When we send investors deals to review, we want to be certain that we are delivering a product that meets their unique needs.

Here are some of the pros and cons:Pros:Gap in the market that can be filled.High likelihood of repeat business from high volume buyers.Because many investors lean heavily on their agents to do legwork, you have a fair bit of control over your sales volume/performance.Your customers tend to be savvy.If you do well, referrals will fly in and you will have a full book of business.Cons:Requires several unique skillsets which are not required in traditional real estate.  

I was under the (mistaken) impression that as a buyer I had to at least indicate to the seller what items I objected to.

What to offer is going to be unique to that property, that neighborhood, that market etc.

I've read quite a few posts about owner occupants being able to qualify for unique perks mortgages in Detroit, so that's another low risk option you have to liquidate the asset and not have future ties to it.3) land contract it to the tenant.

I'm in a unique position to be able to work on real estate investing full time now, and so trying to decide which direction/niche to start with.

You do have a very unique problem as a bank probably won't touch financing that property. 

An inspector will be looking for red flags that something is wrong with each system (including but not limited too: Leaks, major code violations, differences between new/old building standards, electrical, plumbing).If you are a wholesaler, hiring a home inspector allows you to create a comprehensive report of major issues found in the home, take a large amount of photos, and create 2 really unique value propositions for you:  1) You have a comprehensive report so you can hand that to end buyers and show them the work required (no more Open Houses!)