And it is the small guy like you with 1-5 properties who is not set up who has the most to loose.

We got the inspection back today; the issues are as follows: mold beyond the surface mold we originally noticed when checking the house out, wood rot in left side floor, damaged roof joist, poor ventilation in the attic and mold, many of the chimney bricks are loose, standing water in crawlspace--potential mold, leaking shower and toilet leading to damaged floor/ceiling underneath, plumbing material issues, electrical not all properly grounded. 

They are threatening with unreasonable demands such as, give me the money now and I will vacate later else I will cut loose and create havoc.What are your thoughts?

Otherwise you run the risk of loosing your tax advantages and potential fines.

Originally posted by @Jeremy Stachura:i am really wanting to start investing in to rentals, but i see myself moving in the next few years and i want to know how to be a landlord of rentals that are out of state.You can make or loose money in any market.

I have analyzed quite a few places, but they loose money or barely make a return.

If you didn't, you started out wrong.You are legally bound to uphold any contract and terms that the tenants have.

I would suggest running your numbers again and make sure to account for capital expenditures because even on newly renovated homes something is bound to go wrong.

Could i still have an attorney-drafted contract if a situation required it or would i still be bound to using a TREC form since i am also acting as an agent?

And if they are a minor handy person that doesn't bother me with things like a loose doorknob or clogged toilet or burned out light bulb, then they just might be a keeper.