The rest of the house was intact, but had immense smoke damage.

That's why these companies can get away with charging $50k for education.Sure, there will be some element of "teaching" involved, but you can get that information in 10x supply on your commute to/from work in the form of podcasts. 

There is multi family dwellings in other areas of Richmond, but there is less supply, less desirable to live in as a primary occupant, and rents are lower.  

Just a few weeks ago they declinrd to pay a smoking damage claim because (though we had all documentation in place) our cleaning companies invoice did not include a phone number.

There is a ton of work out there and a lack of supply.

@Rob Bergeron i've been looking at houses in smoke town that would be total gut jobs down to the studs.

If we bought it we'd have equity in the property and would be able to use that in the future.My question is should I go through with this purchase or pop smoke and bail?

Yes.The low supply in California is partially to blame.

Builders make more money making more upscale homes, so the supply of starters hasn't kept up with the demand. 

Had to rewire & replace all the old 2 wire outlets (no ground) & install a new panel & run all new circuits, GFI's, the dreaded AFCI's & hard-wired interconnected smoke/CO detectors to code.