Minutes from bus routes that connects to the train which connects to major parts of the city.Ideal Location - located in a mature neighborhood surrounded by several desirable schools.Near local amenities such as a shopping malls and leisure centers.Home setup is desirable - top level and potential legal basement for dual incomeHome is in rough shape and can add value to it (BRRRR method) which is what I want.Alley and Garage parking.Cons - Located on two main roadsThere is street parking in front of the home (2 lanes of traffic both ways). 

Now, if you ran your numbers correctly with the new PITI payments and allowances for vacancy, repairs, and capex, then you should have a cash flowing rental property for no money out of pocket.

Other issue can be corrected relatively inexpensively compared to a septic problem.

Check with the local planning dept to make sure zoning is current/correct, no major construction projects are coming, and that no plans for inverse condemnation are in the works. 

. :)You are correct about the 2 of 5 rule, but there is another one: non-qualified use.

My recommendation:  Focus on Single Family Homes and look towards the BRRRR method. 

So then there're different methods to do the actual gifting? 

The main reason why I’m asking is to determine the best method to value the deal.

Are there any methods to buy these properties since others may be leary? 

If I am interpreting your advice correctly, it even sounds as if you suggest establishing yourself with rental properties as opposed to rehabbing with flipping?