I bought a new roof and new flooring in 2012 for my rental in Houston and have been depreciating it every year.

If you're brand new to this industry, I suggest taking time to 1) educate yourself about the different aspects of real estate investing (which I am still doing) and 2) begin networking and connecting with people on here.  

You might check on the roof if the flue is watertight.

There is a wealth of knowledge here in almost any aspect of real estate you choose. 

The roof however, was completely replaced in 2013 with one layer.This would be an FHA loan with me residing in one side for at least a year and then moving out and renting both sides.  

@Jonathan TwomblyI agree with most of what you said, and thanks for taking the time to write it out.However, there's one important aspect in which I think you were incorrect: 401(k)s and IRAs are typically protected from creditors, although each state has different protection levels.  

@Corby Goadeso the reason that I want to get FHA is coz I could use less down payment on my first property. in future lets say, a new roof is needed in 60-90 days of closing the property.

But it needs a lot of work - foundation issues, new roof, new siding, maybe mold and cosmetically it looks like the last time it was renovated was the 60s. 

I do not play at this level yet, but are lenders typically OK with the owner financing aspect outlined in this deal?

When I saw the house I pulled over to the side and took a look around and it seems to be in a decent condition outside wise (roof looks fine just needs a pressure wash) maybe some new paint to spruce it up and some yard work, but other than that it looks decent..