I was surprised when the agent consulted the seller despite my offer being lower than expected, given the property's condition.

While there were no major challenges due to the property’s condition, we learned how valuable a well-established network and quick decision-making can be in completing fast, profitable deals.

To add to what @Jonathan Greene wrote:1) Understanding the local market, so you know what Neighborhood Class your building is located in, what Class your Building is (condition & amenities), and what corresponding class of tenants will be attracted.2) Using all this data to properly set your expectations and a realistic ROI.3) How to better screen prospective tenants, including catching fraud, so your property performs better.

If the unit is in good condition and is priced competitively, you should get at least one application.

I asked if that could be a condition of the loan that the taxes are paid out of it first.

I have been watching the markets for the past year or so looking for a property that I can use the BRRRR method on, but what I have been seeing is that the homes that require work are selling for WAY more than they should in their condition.

I was stuck in Paralysis Analysis and this program cured me of the condition.

Look at thrift stores and second hand items for some thing-get sturdy things in good condition. 

You would have depreciation recapture on the items you depreciated (75k), taxed at ordinary income rates and then any of the actual property appreciation would be taxed at favorable capital gains rates (50k). 1031 exchange will allow you to defer all of that gain as long as you meet conditions.

She's trouble, so this is where I'd waive the penalty IF she leaves the place in good condition.