Obviously, their mortgage payments have been quite low, but our PITI payments will be roughly $2100/mo. 

If the value came in low enough you can still work on lowering the taxes, but otherwise getting credit for an extra bedroom per unit is a good thing. 

You need financing, property management, contractors and maintenance in place before you get going.

Need $25k repairs (estimate) and ARV is about $260k.According to 70% rule.. my offer should be ($260k x70%) - $25k rehab = $157k.Again.. the offer seems WAY too low.. and there is no way me (or my agent) should waste time putting together an offer.What am I doing wrong here?

The more you borrow, the higher the returns but the greater the risk.A 50% mortgage would provide far better returns than paying all cash and it's extremely low risk.

I would also increase your vacancy, capex and repairs # at the minimum as they are very low.

Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

Switch to some sort of electric heat pump/minisplit.Staying with oil is the cheapest upfront costs, but I would assume more on going costs for maintenance and re-priming when the tenants don’t fill the oil tank.  

Even if my finders fee are low.

He has done all the work in the last 10 years to separate all the utilities so all he pays is th annual maintenance on the property.