This is covered extensively on Bigger Pockets.

Hopefully, the home debt will be covered by your rent collected and you will not have to pay any of that out of your pocket. 

I asked him about that and he said that whoever comes in to texture and paint will cover most of that up with the texture. 

I think i covered everything.

West Virginia's issues "Tax Publications" which lists what is subject to sales tax, and I don't see one for the type of transaction you're talking about, see: West Virginia Sales tax You go down the list of businesses and transactions involved, including motion picture, pharmacies, travel services, etc.

Sent pictures of it and sent her to show the condition.

If I decide to go with model of covering all utilities then rent would be $550-600 a month per student.  

Or I can pay you $130k on a lease option where I guarantee payments to you for 3-5 years, handle all the day-to-day maintenance, and cover all of the closing costs when I cash you out.

Often the Existing structure is covered on the Actual Cash Value (replacement cost - depreciation) and the renovation is covered based on the value of the work being done.  

Most often when agents get in trouble with creative financing it's a matter of not disclosing interests.When you do come up with a plan, you may want to run it past your broker to make sure you cover all your bases.