What do you estimate the cost would be to COMPLETELY repair the roof? 

It also has numerous benefits like low CapEx and Repairs.

The reason that American Home Shield gave for it taking so long is that they had to order the hot water heater from a remote supplier because it was cheaper than what they could get in town.I don't want to six days without hot water and so I don't expect tenants to do that either.I'd recommend placing the money in a repair/cap ex account instead.

I own a few MFH in Tacoma and while they don't hit the 1% rule you can certainly get some decent cashflow with minimal repairs/upgrades.

So never let them do repairs on their own or out of their own pocket that they aren't responsible for.

The price seems to be about $200k less than anything you could find in San Diego county.I agree with the other comments that you should always go with the worst-case scenario in analyzing the deal (plus the contractor is a better expert for repair costs than your agent, but I would get multiple bids).It doesn't seem like there is enough meat on the bones for this deal. 

Number 2 the hard money lender is going to require the contractor to do repairs before getting paid.

There no doubt will be unforeseen repairs and vacancies, but you don’t put that in cap rate, do you?

I think I've located the source of the leak and will bring someone in to assess repairs.

Also has a mobile home on the lot that I may be able to repair and rent out as well.