Long story short, make sure you are the one that has the answer to "OK, so you like it, how does XYZ sound".

It sounds like you have a good chunk of money, but not enough to buy a ton of properties.  

It sounds odd, because it is.

It is easy to tear stuff up, and you will save a pretty penny if you do so.Go to the home depot, home emporium, lowes, lumber liquidators, everywhere and get your prices on paper.Labor is expensive, but if it sounds like a ridiculous number, it probably is. 

To acquire the property, the buyer will need only $702,000 in equity plus amounts sufficient to fund the seller' s replacement reserve, insurance and real estate tax escrows (such escrows are held by the lender for the borrower' s benefit).Would that mean you only need to come up with the $702,000 to purchase? 

Sounds like that’s not the case for you.

Not to mention the sound water being freezing!

(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.