So, here are the basics based on my market, which is AZ.  

Document clearly anything you do to screen the applicant and make sure you do the same for all similar instances.

For instance, if it's a small portion and you indicated during initial intake/application that electrical is updated they wouldn't have any way of knowing. 

So seems like a decent play for cash flow but not much for appreciation.

Send as many letters as you want; many will not pay any attention to your pleas.How about instituting a RUBS based on square footage? 

Reaching out to the community to make sure I'm not off base here to immediately think to decline this offer.  

You want to play the charitable hero.

I would need to consult tax consultant for this however I expect to reduce my effective costs by ~$1,495/month (based on a 32% tax bracket).2.

From my understanding, based on my experience buying and selling properties in Texas, any known repair or damage—even if resolved—should still be disclosed, along with a note explaining that it was fixed.

Based on the above points, you asked us (experienced investors) what would WE decide.