In my mind:Seller wants $250kOffer $225k 20% down7% interest only on the remaining $180k2yr ballonPayment is roughly $1,080 interest$12,960yr x 2 = 25,920 + $225,000 = $250,920Gross rental income is $3,050Minus my management, taxes, insurance, etc... stillWould roughly put me at $1,300-1,400 positiveAm I on the right path or where can I tweak things?

In regards to estate planning and assisted living, my mom is considering long-term care insurance to help with her living costs once she retires. 

2) Is the insurance you have in there based on quotes?

Deal seems to cash flow less and less the more I look into it.Rents(under market due to older but decent kitchens and bathrooms): $4,250 total.Mortgage payments including insurance and taxes (earthquake insurance): $2,800 a month.Reserves $800 a month.Water/sewer/garbage: $500 a month proforma...Law mowing: $200 a month.

Verifying numbers is pretty straightforward- check tax assessor info for property taxes, get an insurance quote, contact a 3rd party property management company and see what they'd guess as being a realistic rent income, etc.

My monthly mortgage payment is around $1500 (15 year loan at 3.375%) including tax and insurance. 

Check the crime and schools, state, county and city property taxes, insurance rates, tenant/landlord laws and rental market. 

This will put me at approx 26k for normal financing.So I asked him why is the closing cost so high and he responded:Bank fees are approximately three to $4000, transfer tax is 1% of the sales price, and title insurance is typically 1% of the sales price.Does this sound fair?

I have ignored them for some time, but any deal is a good deal at a certain price - it just means staying conservative on underwriting.What do people in barely stable/declining markets use as underwriting rules of thumb?

However you are fined by the govt for not being on Medicare and insurance companies won’t cover you for expenses that Medicare should pay.