Ok Bryan Tomko,I am going to give you the best advice I can to help you win this deal without overspending for it.First things first,you need to establish the exact condition of the property,the approximate after repair value,and the true current value of the property.You do this by having professional contractors do a full inspection of the property and estimate every possible repair and upgrades you need to get the property into full ARV condition.This is a 60 year old property in what I imagine is a harsh winter environment.Snow,ice,possible rodent and insect infestations,can and will deteriorate the property over time.I am going to assume a few things now.The roof probably hasn't been replaced in a long time,if ever,it will need replacing.The wiring probably needs repairs and/or replacement.The plumbing needs a inspection with a camera through every pipe to determine damage and replacement if needed.Especially the sewer pipes and main water lines bringing water to and sewage from the home to the city pipes.They are exposed more to the elements and can break over time.I'm guessing the kitchen and bathrooms have never been upgraded and replaced,they will need that completely.New drywall and repainting inside and out.All the costs of doing that work need to be put into your offer by deducting them from the after repair value which you will establish by getting comps from recently sold properties in that area.Once you have all that,you will now be able to sit down with your family and discuss this like a business transaction.No sentimental garbage,just business.You can hug it out with them when the contract is signed.You can use the fact that they are losing 700 per month in insurance as a reason to accept this deal immediately.Now make no mistake,they are going to be upset that the house isn't worth what they hoped it was at this moment.Don't argue with them!!!!

Spent $2k redoing all plumbing including water heater. $600 on paint, $1200 on interior/ exterior doors and trim.

Cast iron plumbing.

If it's your first build, I recommend engineer stamped foundation and framing plans, licensed mechanical, electrical, and plumbing.  

[Roof, plumbing, driveway]I would like to offer to buy the house from him and see if he is willing to finance the deal.

I always re-plumb with PEX - it's a lot easier to open sheetrock walls than it is concrete foundation.

Then two days before this tenant starting flipping out on us because we are "discriminating" against her because we are asking her to pay her rent on time she told us of a roof leak and a plumbing problem.

Also, I would like to just be more knowledgeable in general about my personal rentals, how to troubleshoot issues (plumbing/electric/etc) instead of just relying on what a handyman tells me.

I've had good experience with Chuck Glidewell @ Plumbwell Plumbing Co.    

I have done a lot of work myself (plumbing, electrical, trim, finishing) on our 1924 bungalow that we purchased in 2010 that was a duplex at the time.