They can afford the monthly payments but don't have the downpayment for the house saved yet- they have a plan to do so in the next year.We offered to allow them to rent at a lesser rate for a year (to help them save for the house) and they be responsible for small repairs and at their lease renewal we touch base and see if they want to buy.

If you do all the repairs at once, city hall might require more costly repairs than you expected.

If have you some or all of these things you could send copies with the check and letter explaining repairs.

I deal with the tenants-- take phone calls, screen applicants, show apartments, collect rent, deal with maintenance issues (scheduling and hiring), find properties, market properties, plan renovations, buy renovation materials, assist with renovations and do bookkeeping for rent collections. 

With old houses, things break fairly regularly so if you don't have a good local team to fix things, you will either frequently overpay for repairs or get bare minimum fixes that don't last very long. 

I highly doubt that you will be able to create $25,000 of equity with $1,000 worth of repairs (which seems a bit low anyway)  Other than that it doesn't look bad but it all depends on the area.

that is something a real estate agent can help with. plus once u start searching for leads u will need to be able to determine a value and after repair value which a agent can also help with. and an agent can also give u a list of properties owned by absent owners, and that can be the first list u target to find some deals!

Then refinance out using a conventional loan and pay the seller.It would take me ~6 months to built up all of the money I would need for the repairs.

Beware of costly repairs that can ruin your future cash flow. 

In some areas the potential sellers are getting 20-30 letters every month and they will tell you this over the phone when they call you.