In my research I've seen many warnings that have been, "wood with water is never a good thing" and various warnings about insects. 

Most contracts will have language similar to "Seller will provide free and clear title as of the date of settlement" There may also be language that says "taxes, municipal bills, water etc will be adjusted as of the date of settlement" read the contract you use and understand what it says. 

Of course electricity, wood for stove, gas, water etc are all included.  

You don't really need to go with a big name brokerage, just get all of your class at the board and make sure you stay out of hot water. 

@Damien Cox If you are finding a lot of seller leads that are under water, you may want to find a short sale specialist in your area and establish a relationship.

I keep hearing of homes that cannot be financed through traditional means due to condition deficiencies like broken windows, non-functioning kitchen, no running water, etc.

Look at the ceiling and see if there are any water spots or cracking5.  

I called the field service company that is maintaining the property to get access for inspection and found out that the instant hot water heater, according to their own reports, is likely bad.  

So far, my expenses include the following:- Property Taxes: 1.25% of purchase price- Rental Insurance: 0.5% of purchase price- Management Fees: 10% of gross rent- Vacancy Rate: 10% of gross rent- Repairs & Capex: 10% of gross rent- Utilities: (garbage, sewer, water): 10% of gross rent- Mortgage: 30 year with 20% down paymentWith these assumption, I get negative cash flow in my area.  

all these old houses have the same issue. the wall is 2" deeper than the tub and you cant put tiles there to prevent drywall damage.you fix the drywall and it comes back. i am guessing the tub has a slight pitch and that's why the splashing water is rolling towards the outuside of the tub.see the picture.the corner guard is not helping, as you can seeanywhere to fix it?