This will put me at approx 26k for normal financing.So I asked him why is the closing cost so high and he responded:Bank fees are approximately three to $4000, transfer tax is 1% of the sales price, and title insurance is typically 1% of the sales price.Does this sound fair?

However you are fined by the govt for not being on Medicare and insurance companies won’t cover you for expenses that Medicare should pay.  

The loan payment alone at 5% would be $1147, then you have taxes, insurance, maintenance, vacancy, etc to pay for. 

In Indy, taxes are 2% of assessed value, but homeowners can get an exemption to reduce it to 1%.

So far, only Trulia seems to have percentages of homeowners vs. renters broken down by City.

Closing costs for me average 4-5k this includes pre paid insurance and taxes

Insurance, taxes, mortgage, and park fee were $8500. 

The homeowner is okay with us getting in there and getting started now.

Rent is $950, mortgage $512(taxes and insurance included) So, there is a good chunk of equity in that property.

If it's not the tenants fault, you can file for insurance or out of landlords pocket and not tenants responsibility.