Needham decision (Circuit Court of Jefferson County and not binding on any other courts, but still provides insight into how judges think about these things), the failure to obtain possession within 3 years of the tax deed date is fatal, and means the former owner (the company) can get the property back and not pay you anything at all. 

The failure to get security deposits was a huge red flag because it showed both that the apartment recently had a significant number of vacancies and the seller was so desperate to fill the vacancies so the property looked more ideal the seller enticed tenants to move in by not asking for deposits. 

This is a massive failure on your agents part...s*^t happens, yes, but the process from inception should have been controlled by your agent.

Not sure the rule in NY.some examples of Just Causes for eviction: Failure to pay rentContinued violation of a part of the leaseDoing significant damage to the propertyUsing the building for illegal purposesIf the landlord wants to move into the property.

Many OOS investors set themselves up for failure because they don't truly take the time to understand:1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.2) The Class of the PROPERTY they are buying - which is relative to the overall area.3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.7) That OOS property Class rankings are often different than the Class ranking of the local market they live.8) Class A is relatively easy to manage, can even be DIY remote managed from another state.

Owner says they haven’t had any failures. 1) Is there a warranty or insurance product out there I could get seller to purchase to cover the systems in case they start failing.

You will set yourself up for failure if you build your business process around automation.

Don't think that one particular out of state market will shoot you to success or abject failure.

Could an argument be made for using the $ I would spend on training, and get a real-life lesson by "doing" and learning from a failure?

You never hear about the failures, except maybe in the divorce decree filings because they forgot about their spouse and bankrupted their family trying to sprint before they learned to walk.