First time home buyer...should we close or cancel escrow?

[Shel K.]

BP we need advice! First post so please forgive the formatting. 

My gf and I are looking at a (town)house hack for her (she's buying on her own). Unit is 3 bed/2.5 bath with attached garage and tons of deferred maintenance. She's planning on living in one room and sharing a bath while renting out the other two rooms. We're trying to figure out whether to move forward with this deal or not. She currently pays $800/mo rent for a large master and attached bath in a townhouse nearby.

Location: West San Fernando Valley area, California

Type: Tri-Level Townhouse, 3/2.5 with attached garage, built in 1981

List Price: $416.8k

Accepted Price: $412k

Appraised Value: $415k

Potential ARV: $465k 

Mortgage: 5% down at 4.375% with a small lender credit

Monthly PITI + HOA: $2,950 

Closing Costs: Approximately $6,500 (includes $1,800 Seller credit we were able to negotiate prior to agreeing on price)

Comps: One sale and one pending in the same complex within the past 3 months: one is in escrow, listed at $460k with rehabbed kitchen, newer AC unit, new paint, flooring and bathroom vanities; another REO sold for $432k (end unit sold as-is, looks fine from pictures)

Rehab: estimated $25-30k (see below)

Pros: Broker (friend) representing her in the transaction is crediting her the entire commission (almost $10k); Seller is crediting $1,800 towards closing costsAlready appraised higher than purchase price; Rehabbed unit in same complex gives us an idea of what her ARV is; Price/Sq Ft is the lowest in the area for a larger townhouse (almost 1,600 sq ft); managing/doing the rehab ourselves mean we know it's done properly; only putting 5% down; if rehab takes 4 weeks, have another 3 weeks to secure tenants before first mortgage payment is due

Cons: Tons of deferred maintenance; rehab time (estimating 2-4 weeks); paying $1,250/mo mortgage after room rent income vs $800 in rent

Her plan is to rent the large master with attached bath (calculating $1,000 rent conservatively, aiming for $1,250) and the next largest room with shared bath (calculating $700 rent conservatively, aiming for $800). She would take the smallest room and shared bath and use the half bath as well. 

Her concerns are: (1) the listing agent has been operating in bad faith and (2) the amount of work involved/uncertainty of it. 

Listing agent has been operating in bad faith because when we saw the master bath shower, he said the damage was purely cosmetic. When we asked why the AC wasn't on during the open house, he said the Seller doesn't use it and there's a nice breeze in the unit. Seller disclosures state the unit is in compliance with CA mandated guidelines (smoke/CO2 detectors, seismic gas auto shutoff valve, water conserving fixtures, etc.) but the inspection report proves this is false. We were not aware that Seller continues to use the master bath shower with cracked floor. We both realize that once the transaction is over, we shouldn't have to deal with the listing agent/Seller anymore but we're also afraid of whatever else they might be hiding. 

There's plenty of work required/recommended here. She has no experience with fixing things but is resourceful and willing to get her hands dirty. I have a little experience with fixing things and can follow (YouTube) directions. 

• HVAC system & ducting does not work and needs to be replaced. Quoted at $7k. 
• Second floor master bath shower floor is cracked and subfloor in front of the shower is rotted so the subfloor, shower and floor have to be redone. Seller continues to use the shower and we believe the water may have leaked to the first floor ceiling (can see water stains on the ceiling drywall). Estimating $7k. 
• Wasp/rat remediation in attic. Quoted/estimating $1,500. 
• Kitchen counter cracked, sink has a patched hole. Estimating $7k to redo the kitchen and bathroom vanities ourselves (Chinese RTA cabinets & Quartz prefab counters sourced locally for $4k). 
• Paint the entire interior and some patching. I have a paint store contact who gives me excellent prices on paint. Estimating $1k-3k depending on whether we do it ourselves or hire someone.
• Replacing worn carpet/vinyl with water-resistant laminate. Estimating $4k.
• Bunch of other minor issues that we could fix ourselves. Estimating $2k. 

After the inspection, we discovered the wasp/rat issue, HVAC ducting likely needs to be replaced, CA mandated retrofits not completed and the Seller continues to use the shower with the cracked floor. She requested repairs or a $5,000 credit in lieu of repairs. Seller declined and said they'll fix some minor things. 

After typing this out, I'm leaning towards suggesting she moves forward with it but I'd like to get BP's input. Would you complete the transaction or walk away?