Right now the place you come up and there's an inset covered area where both doors go, one leads into the living room downstairs, the other directly onto the stairs to go up.

He has a lot of pictures on his website, and does fantastic work. 

Since its my first i was hoping someone can help me with a sample contract that they have which show what the format should look like and what points should be covered.

If your not getting showing a $25 reduction probably isn't going to make much of a difference.You may need to reevaluate the rent.Look at the pictures and ad the PM has if you can.

Pictures located here: http://www.biggerpockets.com/forums/12/topics/588904-what-do-you-think-of-this-deal

The basement is accessible from the bottom unit as it is, I would just need to frame and sheetrock the garage access from the basement so it doesn’t abut a bedroom in order to cover my bases (I believe). 

If your guy is preapproved for a loan, his bank most likely isn't going to fund the deal with income like this for the reason that you mentioned, free cash doesn't even cover debt service.

So I get a fix and flip loan from a hard money lender that covers the purchase price plus usually around 1/2 of the renovation cost.

It will be right in the paperwork you sign and doing it anyway may mean your not covered if the place burns down !

The sellers offered to submit an insurance claim for the stolen ac units and take that $ to cover the difference between our new price & her mortgage payoff.