I bought a lemon. How do I get some of the money back?

[Fay Chen]

I bought a duplex in TX late last year site unseen. As an out-of-state investors, I got hit by one of the unknown unknowns. It turned out the house didn't have proper drainage so all the water in the neighborhood drains to my property and sits on one side of the unit. That's not something I could've foresee even if I were to see the property in person prior to purchase. (I live in sunny SoCal, and holy crap! It RAINS in TX!) 

After $4000, I put in a french drain, rain gutters, and fixed the water damage. Now I'm looking for ways to recover some of the costs. So I identify several possibilities:

1. Seller. Seller did not disclose pre-existing drainage issues of the property. in the offer, we specifically told the seller NOT to do any work in the duplex. She replaced some drywalls prior to closing anyways. In hindsight, she probably did that to hide the water issue.
2. Seller's listing agent. The house was listed for a few months. The agent should know the water issues.
3. Inspector. The home inspector noted some water damage. But under drains, it was checked as "good." The house sits below grade and there were no drains around the house.
4. The city. This is what my handyman suggested. He said I can go after the city for the money if I can get several neighbors testify that the problems has been there for years. Not sure how this works.
5. My insurance. I'm trying not to file a claim because it would significantly increase the premium.

My property manager contacted the listing agent and the inspector. The listing agent denied any knowledge of the issue (of course). The inspector said he couldn't have known the drainage issue by looking at the house (I'm not sure I believe him).

My property manager suggested me contacting a real estate attorney. Is that the best way to go about this?