Then, I would run another analysis where it is a "worst-case scenario".

That way, in the worst scenario, you would still break even.

Worst case scenario a large amount of savings and a good work history might get you in the door (also assuming the rest of their screening comes back good) rent for a bit, then get mortgage for home.

@Daniel Weber @Chris Isley thank you both for the quick and grest insight.As far as the contractor is concerned, for this scenario, do you suggest finding a contractor who will (or can) subcontract other professionals (example electricians, plumbers etc) or finding someone for each particular job that needs to be completed?

It's common for duplexes to have an added illegal unit, and I own a number of them through the years.

If you have partnered with your Ira &  lend $$ from your IRA in the scenario described it will be a “prohibited transaction” and blow up your Ira. see if you can get a non recourse loan from an allowed person, Ira, or company. 

Perhaps he's selling for financial reasons and I could then go back to him explaining that by avoiding some minimal effort such as calling insurance to deal with some issues could cost him big in the long run because when the market is sh*t in the next couple years (if it gets worse) he will have to hire a Realtor and pay 6% to sell it nevermind the fact that his house is at peak value right now (depending on your market but most places hit peak in 2018) and if he decides in a year he wants to sell it will be for less money.There is always an angle with someone you just need to find it, and sometimes yes it is very hard to do so.The worst case scenario is you get your money back and can mark this down as an 'experience' deal

We don't charge a security deposit for this apartment because we aren't so concerned about the apartment being damaged but we are concerned that a dog might damage our cat so we'd prefer to avoid that scenario all together.

That's if there's a scenario where you can see your self retaining ownership.  

Seller gets an inspection and starts making repairs asap, we think he's motivated to sell now but seeing other outdated comps we think the property will appraise at 340k and seller will come down.Can someone with more experience in this small multi-family market give these numbers/scenario a quick run through?