To let that profit wither away in a plain old .05% bank account seems like leaving money on the table where it otherwise could be put to use.

When I saw the property earlier this year, I told them up front if I made the offer it would be a starting point not a take it or leave it option.  

I've heard that a lot of "wholesalers" bring buyers these awful deals that you can't make money on, and supposedly those are the ones who leave a bad taste in people's mouths.

(thus giving you all your cash back plus (hopefully) a little extra AND leave you with 25% equity in the property with a positive income each month?)

Yes, they will leave "some day" but you will have created a working partner for life as well.

I assume these systems were mostly updates of old octopus systems (fully gravity fed).Local HVAC guys suggest leaving as-is unless someone wants to put AC in - but if we can avoid limiting the (future) borrowers to non-conforming products, that would be good!

I'll leave it to the experts here to expound upon my notions.

I am licensed in 3 states (NJ, NY, PA) and experienced in the full gamma of real estate business (buyer, seller, agency, management, construction, landlord).Currently have 4 properties, and looking to dedicate my time to buy/rehab/sell(or keep) and build a portfolio in the try-state area that i can leave for my children. 

For some reason though, the sellers gave the tenants half of their security deposits back, leaving only half to me.

She's willing to walk away and leave equity in property. 2 months behind on mortgage.