(Or how does it work) When it's all said and done I pay $2,500 out of pocket for the work then I pay a $1,000 deductible  to my insurance that's $3,500 out of pocket to only have to wait for a check by my insurance company, this doesn't sound right to me 

Ask him what's the lowest he would take to get it off his hands today, and work from there to get the number to a place that works.However this does not sound like a deal at those numbers at all...unless there is literally nothing that needs to be done (that's rare though even if it's something small, small things add up), then $520k sounds like a good price for a flipper. 

Sounds like a good plan, just remember real estate is a long term path and your thinking on the right one.Might close on the new house so you won't have issues with improvements being made, you'll want those expenses to be depreciated as an investment property.

Originally posted by @Paolo Nascimbeni:In a NNN lease the tenant pays also for property taxes.Also 750,000 * 0.04 = $30,000  if you consider  the interest only  cost of the loan Great point - thank you.So keeping the cost just to Interest - its 3% a year. [1MM x 0.75 (loan amount) x 0.04 (Interest Rate) = 1MM x 0.03 ]So you see - it seems fair to say - the Net Cap Rate is 5-3 = 2%.Counting on the down payment - its 4 times - 8% rate of return on actual 250K that investor puts in.Does that sound about right?

basic sub too.. deal as long as your personally well capitalized. this scenario probably works.its the undercapitalized buyer and the sterling credit seller that creates a huge risk for a seller and I don't recommend any seller to participate in that type of deal.but since the sellers credit is already bad there is real equity in the deal that will keep you in the deal and you sound like you have the wherewhithal to pull it off..

Personally from what I'm reading it sounds like a problem property; unit vacant, all section 8, cashflows good, but the owner wants out.

If this carpet is in bad shape, pull it up, replace it with Allure.4.

You could probably replace your existing cabinets with basic builder grade cabinets for 1000. 

@Brandon Vu  it really sounds like you should sit down with an experienced real estate professional and ask all your questions. 

@Jayson H. sounds weird.