I knew his number was off since sub 1k for a 2bed is really low for Minneapolis but still seeing that and the condition it was on final walkthrough started to plant some doubts.

A reputable contractor who can help verify property condition and provide rehab estimates.

It seems in good condition but all the flooring has been torn out and it doesn’t have a furnace currently in it.

it all depends on the condition of the property.  

Don't be this person:"selling" for over market price.Selling a $100K for $10K down and note for $100K (market), then expecting buyer to refi in 2 years.Selling/renting a $100K house (in good condition) for $10K down and $90K note, but needs $20K in repairs.This list of ways to sabotage goes on and on.Courts see through this bull. 

-Interest Rate Adjustment: The interest rate payable on this Note will be subject to adjustment from time to time in the event "lender" deems it necessary or prudent.The above terms are not all inclusive and any final commitment and documentation would include other such conditions that are customary for similar transactions.

@Phil Acnodnem1) that’s up to you, assuming the house condition is good enough to finance2)not sure how your assessment valuations work there...here it’s based on market comps, not what you actually paid for it3) makes no difference4) you need a title company or attorney to give you a standard purchase agreement, for the two of you to sign.  

@Paul SmytheMarket conditions change over time.

Storage areas can include built-in cabinets, closets, attic space, and even outdoor sheds, etc.Laundry: Including a laundry area and machines is a big bonus for tenants, as they compare that with apartment living where they would have to use common laundry machines that require payment.HVAC: Make sure to include an effective dual heating & air-conditioning system to service the ADU, so your tenant is comfortable in the unit.Kitchen island: It may be difficult to squeeze in a kitchen island in a small ADU, but it’s a big bonus if you can make the space.

Actually it might be the worst.It's not a matter of learning the process; it's the fact that you are buying a property in unknown condition, both physically as awell as financially.