After further thought and talking to the seller I was told that the leak in the roof is a small one that can be fixed and the one in the basement is because of the door, not the walls. i figure I'd give it another shot because rents in this area are between $650-900 for a 2/1, 960 sqft. and if the inspection shows that this is correct it could probably be fixed for a reasonable amount.

We removed a wall between the two main living areas as well as took some space from the garage to open everything up.

changed usuage to residential and converted the first floor to a residential unit with a few walls and doors What was the outcome?

Two baths and two kitchens need to be repaired along with walls to be painted and carpet pull out.

It's almost completely gutted, and what looks like wooden walls in the living room and paneling everywhere else.

If you were thinking of oiling a door hinge or putting a new screw in the curtain rod bracket - now's the time.If you have mini-blinds that have pull strings to operate them, take the time to trim the strings such that they don't dangle to the floor, and install a cleat on the wall next to the window so the strings can be wound around the cleat when the blinds are pulled up. 

The walls were built with 2x2’s and 1x4 bracing at the top and bottom turned sideways instead of actual plates.

@Jaron Walling it is between Rural and Sherman, closer to Sherman. 

Block wall construction, roof looks less than a year old, decent location.

I was considering ripping out the carpet (has some tough stains), installing new vinyl wood floors, repainting the walls, do a thorough deep cleaning, and converting the loft room back into a bedroom (putting up the top half of the wall and putting a door in), and then finally rent out the townhouse.