If you won’t pay any closing or agent fees, I’d suggest stating that up front so everyone knows what to expect before showing or writing an offer.

Your seller will be doing the 1031 exchange so it doesn't matter who they sell to.  

Some of the things you have described sounded like the structural integrity of the home could be compromised so it might be more then cosmetic things.

To give some context, my budget is around $300K, so any recommendations within that range would be especially helpful.Looking forward to your advice and suggestions!

If so you can rent rooms to anyone and nobody can stop you.

So true....good advice!

They can ask you to serve notice so one unit (or both) are vacant at the time of possession, but if you agree to that make sure you have a large deposit and some of that is not refundable if the buyer backs out as you will need it to cover the lost rent.

Calling gas when they believe they smell gas is a desired event. 

So, after closing costs I would need roughly 55k cash to bring to the table. 

Also, be sure to clearly outline the agreement you have with your investor in a signed document so that there is no confusion on the back end.