You wrote in your post the property needs rehab so you might already proactively address some of the repair issues that cause older building to fail...BUT...do not expect an easy ride regardless.   

If you can't, now you're in a space that might cause complications.Now, sometimes maybe it does make sense to do some work....but generally speaking, we pay a contractor to do it.  

Also, don't know how comfy you are with math but it is good just remember the formulas cause that could save you when you need those couple extra points to pass.

Any delays were caused by the Tenant failing to provide a forwarding address, so that's on them.Now that you have the correct address, send notice to that location along with a picture of the original envelope to prove you met the legal requirement.

Painting in between tenants is a given, though unless they really work at it they won't be able to cause much damage up high.

Tenant shall not place into any drain lines of the Premises any non-approved substances, such as cooking grease, sanitary napkins, diapers, children’s toys or other similar objects that may cause a stoppage.

It decreases your risk (since your down payment is so low) and keeps the home in your backyard while you get your feet under you (you can always move after a few months, just need proper cause)

I backed out, whick kills me cause that house ticked so many boxes.My realtor is now telling me I should only look at houses without an hoa, which I'm doing, but I definitely see a jump in price for that.I know there are sone hoas that have less serious restrictions, such as a 30 day limit, but i just wish i knew of a good way to find out before putting an offer in. 

Do you know what is causing them to no longer be paying rent? 

Inspections do vary from area to area, and inspector to inspector, but far more often than not, the owner is required to make repairs, even if it is obvious the tenant misused or intentionally caused the issue.