This has probably been written about on these forum's or in a blog countless of time's so you could google and get this information.The short answer is you need to know everything so ask a lot of questions.

The second part is to do a ton of research and see if the rents have also continued to increase over a long period of time...again it's probably safe to assume they will continue to increase.

The seller is threatening to take our earnest money deposit when we tried to cancel during the inspection period. 

I would be open to short term mentoring with an agreed upon financial arrangement.

Long story short, make sure you are the one that has the answer to "OK, so you like it, how does XYZ sound".

The IRS has a 120 day redemption period, which they almost never ever exercise, and then their lien is void on the property.

Trying to negotiate a short sale but if the wife isn't willing to cooperate then this thing is going to foreclosure.  

Matt,Will respond to your email shortly.

I am looking to get a 30 year fixed mortgage shortly (construction to perm to be exact.) and am trying to find out the best way to file 2016 taxes to increase chances of approval.

Short answer, we bought at a price somewhere between actual value based on actual numbers and what it would be worth when run by a reasonable operator.