Vacancy should be part of your normal expenses so does not factor into the reno costs.

Normally investors do not want to pay off rental properties as their goal is to increase their investment income not decrease it.For a investor it is sacrilegious to have cash lying dead in a property.

That is how much the cash should earn in a normal investment.This is the opportunity value of cash which must be paid first otherwise cash is worthless.

From a strict cost of insurance coverage it will normally be cheaper that way.  

@Patrick Burand,I can see if I have a colleague up there I can send you to; however, my normal advice is as follows.You definitely need someone qualified, does not have to be a CPA, could be an Enrolled Agent or an attorney.

Mortgage, utilities, maintenance will match or exceed the purchase price and out strip normal appreciation which historically track annual cost of living increases. 

Red flags seem normal based on the value of the property.

Cosmetic fixers with good bones are best since cosmetic items normally add the most value vs cost to fix them compared to the stuff you don't see (plumbing, electric, roof, etc.).

While I fully recognize this is a business, given way he treats the property and always pays on time, I will not consider evicting the tenant, but I do want to take steps to normalizing the rent.

Offer based on that - sometimes that means you offer over list price, sometimes it means you offer under, but remember we've already disregarded the list price as irrelevant, so that doesn't matter.I've seen top 10% buyer's agents run a CMA on the listing agent, to figure out if they normally list for 10% under value, 25% under value, or maybe only 5% under value, and track normal days from listing to pending for that agent.