They suggested adding an external cleanout for about $8,000, and we agreed to split the cost by adjusting the home’s price.However, after installing the cleanout, we discovered that the actual problem was far more severe.

I also discovered that the company in question had a history of not renewing their license and hadn't so in 2011, 2013 and 2016.

I also caution in taking on more than double the rehab expense you've incurred in the past - especially with a property that isn't tenant friendly from a parking standpoint; it won't be long before the trekking tenant discovers that trolling for street parking isn't the cruise he signed up for and starts parking in the yard, squeezing in the driveway, or starts claiming defects with the property so he can terminate the lease. 

His company has a 5-star rating, and upon reading the fine print I discovered he has a non-disparagement clause in his contract.

I did the math and discovered that most rents in that particular area of HI were roughly equal to the interest, taxes, and insurance portion of a mortgage payment.   

Indeed, tenant screening is 80% of the secret sauce.Good luck!

Maybe you have a secret sauce??

Again, other might feel differently here.b) Skin in the game: as a conservative investor, I understand that the dirty secret of industries that the waterfall compensation is in the line with me and incentivizes sponsors to take more risk.

However once I got it going it has been great and I learned so much.The perfect deals of buying a duplex for 40k and then discovering it actually a triplex by putting  a 500$ wall and door in, then the value is 400k cash flowing 3k a month with 41k isn’t real life.

The most reliable method to discover local regulations is by visiting county websites and calling their offices for confirmation.