I would say, first see if the house was built with proper permits.

(b) Failure of any person to obtain a permit or keep the permit in force and effect by proper renewal thereof, where a permit is required, shall constitute a violation of this Article.Sec. 34-864.

I have Section 8 rentals in Cleveland, Ohio and Concord, Ca and Oakland, Ca and those tenants are by far the most reliable, maintenance free and hassle free tenants I have compared to my cash tenants because either myself or my property manager screened them properly.

Hey Justin, that's awesome that you've been working in the industry for several years already, understanding how to properly screen tenants/manage properties is a huge component of owning rentals.

That will be a heavy price to pay to fix and will only keep coming back until fixed properly.

I would love to reach out to the owner directly via a letter and offer but i wanted to be sure that I do it carefully and armed with all the correct advice to do it properly!

It sounds great in practice but is much harder to implement properly.

You could get an acquisition loan for $1.76M(assuming 80% LTV)A construction loan for $400k(assuming 80% LTV)You would need to come up with $540k for the duration of the rehab via private money, equity partners, etc.If you created enough value to get the value at $3.375M when you refinance, you could recapture the borrowed capital AND  your own capital. 

Find a reliable property manager that you can trust to properly screen your tenants and show your property.

As stated above ^^, Toledo market can be tricky if you do not have the proper connections and guidance.