I just don’t want to have a terrible start and be taken advantage of because of my lack of experience.

The 11 unit had 2 terrible apartments.

They will unfortunately expieriance the terrible reality of their rehab project getting broken into and appliances being stolen.

Doesnt sound like wear and tear would be covered so it would have to be a terrible wind storm so you may get stuck with paying it anyways.I can speak to point 2.

Them : " Asking 90k,   20k rehab ... estimated ARV = 150k"Reality:  " 90k + 50k rehab , estimated ARV =  120k"   because the house is in a terrible neighborhood. 

Yes, the public schools there are terrible, but you can do charter or private school possibly. 

That list doesn’t seem terrible, but then again a normal seller may be scared, especially if you told them you estimate a large repair bill.

This deal is not terrible, sounds like it would be hands off and decent cash on cash if your numbers are accurate. i dont think the 5 yr balloon would be a deal breaker for me though which sounded like your question.

The people you network along the way and lessons you learn will allow you to get that homerun next.2) Being slightly negative cash flow while house-hacking isn't terrible.

It's a terrible design and I can't imagine the amount of headache you will incur by trying to rebuild something like that.