For example if they did backsplash on the kitchen, make sure no tiles are cracked and there's no small little holes in the grout between the wall outlets.

Kitchen? 

I grew up in a house that had a hand pump in the kitchen and we had an outhouse in the shop out back.

Ceilings need to go too, but floors are fine except for a few problem spots. 5,000 sq ft.  6 kitchens, 6 baths, and about 35 total rooms, closets, hallways, etc. 

And of course the general location and specific location (is it on busy street, near train tracks, transformer substation, etc.)After that, I would say the quality of the kitchen and bathrooms as well as the master bedroom (is there a walk in closet).Then HVAC.

To add to what was mentioned, I would look at the maintenance history of the property to see what repairs have been made that are more capital in nature (say, new counter tops or kitchen) versus an ongoing issue (plumbing backing up every few months).How is the insurance search going for you as well.  

The townhouse is 3 stories with a office on the bottom floor, kitchen and livening room on the second with all rooms on the top floor.The Townhouse is being rented by a friend and we are being helpful this year.

Renovated kitchen and bath along with renovation on 100 y/o hardwood floors and new roof to make this a downtown Concord gem.

I thought if you took the first floor and knocked down a wall and remove a kitchen you can turn 2 units into 1 unit.

If it truly is just the paint and carpet and outdated but functioning bathroom and kitchen, a conventional mortgage should work as long as it appraises at the right amount, right?