Hard Money Lending (HML) for this purpose.Conventional LendingWill Require a Down Payment in all scenariosWon't allow a rehab budget on a duplexDoes have a 30 year fixed rate optionMight not approve the property at all if it's in very rough condition or if 1 major thing is wrong (like a foundation or a roof)Can be cumbersome, 30 days to closeLow interest rateHard Money LendingWon't Require a Down PaymentWill allow rehabShort term money only (so you have to refinance if you are keeping the property)Doesn't care about condition since you will have the rehab included in the loanSuper easy, can close quicklyHigher rate and higher feesSo here's how this all plays out:Conventional lending - will require 25% down payment on a duplex investment property ($34,250 based on your numbers above) + closing costs ($7,000?) 

Get a Licensed roofer to inspect it and give you a letter certifying it's condition, show this to the Ins.

Look at houses that sold in renovated condition that are similar.

Depending on the seller's condition, it may be a win win for both you and the seller.I am certain they are other creative finance options available that I must have missed, It may help some more if you connect with some of the investors in your area(via BP or your local meet up).Best of luck.

Maybe the units are in poor condition and they are properly priced at $500/month? 

Are the market conditions [number of people moving in or out of an area, supply of land and homes, regulation, income distribution, ect] the same in Detroit as they are in LA?

Lack of underlying soil conditions like you see in Texas  IE foudations going wonky and requiring on going maintance that can be expensive.5. at that price point you get the best qualified renters not the bottom 1/2 of renter pool you get the top half.5. newer construction  Stucco tile roofs etc   compared to 40 to 100 year old homes in other markets that need greater care to keep functional. 6. ease of getting there direct flights to many places a lot of areas in the mid west you have to connect.. thats an issue at least for me.7. things to do.. 

It can only be cancelled if the terms and conditions are violated.  

I was originally going to buy a a 2 unit (Unit A is 3 bed/2 bath and Unit B is 2 bed 2 bath) in great condition, but was outbid.

We have invested about 20k in repairs and the house is now in great condition.