If you put 25% down your paymebt would be $850 to $900 p&I, taxes and insurance would run about $300 per month, I doubt he pays for any utilities except you'll have mowing and maintenane plus a potential 8% vacancy rate.

Now you also have title chain, insurance and DOS risk on top of business risk.

We call it a "Debt Coverage Ratio" at my bank.

Apart from the mortgage, I would need to pay the homeowners insurance ($2,000) and homeowner's association fee ($500). 

My insurance went up about 3 times when I switched from standard property insurance to a STR policy ($1,200 a year to $3,400 a year).

Do you have E and O insurance to protect the agent?

When they do this, I set aside the appropriate amount for maintenance, capex and taxes and insurance.

If it were mine, I would pocket any insurance money and dump the property.

It's common for commercial properties to make the tenant responsible for taxes, insurance on the building, maintenance on the interior, etc.Just keep in mind additional requirements may be enough to scare them off.

On Fridays at 6, we have a resident HOA attorney on drinking schedule until 9 that'd I'd love to introduce you to, as well as sporadic visits from some great members in the insurance industry.