FHA mortgage will not tolerate that kind of defect.

For us it was only a couple hundred bucks more and it protects against mechanics liens (plus many other title defects). 

you could look for opportunities with reverse mortgages in default (backwards marketing) and tax defaulted property (the last group can be difficult to sift and sort due to large quantities).In the end, you’ll do much better focusing on solving problems that others cannot or are not willing to solve (hoarding, squatters, liquidity, defective title, skips, etc.).BTW, I started with working foreclosures (1978) and then deceased owner and title-impaired property about (35) years ago and have closed several thousand deals to date.  

Here it appears the contractor misrepresented/ concealed the defect rather than repair it.

Apparently 95% of new multifamily construction is rentals now rather than condos due to arbitrary regulations by federal mortgage agencies and how those get intertwined with contractor defect laws https://www.minnpost.com/cityscape/2014/02/where-have-all-co..."

If you truly feel it is priced well and there are no property defects, then you shouldn't have no hits.

You are able to complete the project and sell the home, but do to your inexperience, or inexperience of your subcontractors, there is a large defect that isn't discovered until your buyers are living in the home. 

What is the function of age, structural defects, community, population, etc. on the cap rate?

I would advise the tenant's attorney that 1) The first time you heard of any defect in the property was his letter. 2) There was no mold present when his client accepted the leased premises. 3) You have tried to investigate his claims and make any necessary corrections to the property but his client has refused access. 4) Describe your lease terms for early termination - what must be paid, etc.Also Google the attorney and law firm.

The Committee makes no warranties, either express or implied, concerning the property’s condition, and no adjustments will be made for any defects that may be discovered after this date.