My credit score/report isn't a true picture of my situation. 

More than likely your lender was being lazy and did not want to look at the whole picture.

Pictures are powerful!

I do not like all the bubbling up you have, it looks like it is failing or was never installed right. i would replace it. i would negotiate the sheathing price, at 2.50 / sq' they are charging $80 per sheet to replace a 4' x 8' sheet. make sure they secure the top edges of the roof when they bring it up the walls with a metal strip anchored into the block, this will keep it from coming down like the first picture. and i would agree with the size gutter and downspout they recommend.

If you google Mitsubishi ductless floor mount you can see pictures of your options.

Pictures are coming soon...I think the obvious answer is 'Yes, bill the tenants for the new hot water heater'.

Most of the people I work with - pass on 90% of their opportunities because they get the full picture on rehab costs before acquisition.  

I see a child in the picture which adds complexity to your ability to do a good job.  

Hope I painted a good enough picture for your guys' evaluation on my current situation..just look for some advice on taking on a flip or buying rental property considering I don't have a job.

We are currently using traditional financing with 20% down.Unit 1 - rent = $495Unit 2 - rent = $650Total income = $1145Cap rate (based on our offer) is 16.4%Cap rate (based on asking price) is still 14% ROI = 34.41%Picture below is from Bigger Pockets calculator:Picture number 2 below is our own calculator at full asking price purchase: if we were to increase rent on the smaller unit our cash flow will increase (easy added value).After walking through the property twice we see no real updates that are needed. ($0 estimated repair costs)We are waiting to hear back from the agent if we need to counter offer.