Very simplified version but I hope it paints a picture. 

It needed a new roof, new septic tank, water heater, well pump, hardwood floor refinishing, light reno in kitchen (paint cabinets, replace countertops, 1 new appliance), full bathroom renovation on 2 bathrooms cleaning up wood rot on siding, painting exterior.

Figure a few grand to paint rooms, replace carpet in a room, deep clean and spruce the property, replace a fixture or two, etc.If you have to replace your resident annually the $9600 total income will get a gut punch.The true value of the higher-end neighborhoods is residents know if they move out of the home they have it's a challenge to find another, especially if they have been there a few years and have a competitively rewarding rent rate.All this really is is basic economics...sell ten custom widgets for $1000 or 100 standard widgets for $100 each.

Ive been borrowing and doing deals for several years...Never have I ever heard of a lender not disbursing funds to a borrower because walls were not painted.

@Nathan Gesner To your point about $10,000 houses and appreciation, averages paint with broad brushes.

All of my SF deals have  been with boomer+ landlords that have been self-managing for decades.I look for tired plexes like 70's builds that  need paint and window coverings with smokers and pit bulls as tenants and crude for rent signs.  

New paint, Floors, Kitchen, Bathrooms, Hardware, Windows, Light Fixtures, and Appliances.

Clean, paint and make the really necessary repairs that would offend a first-time home buyer.Let me give it to you straight.

Lake Havasu used to be hotter than Phoenix, but all the blacktop made them eventually surpass Havasu's heat - you can fry an egg on your car if you don't care about the paint :o). 

Also if it’s underground the whole property will need to be flagged and painted for underground utilities and if they are ruined the crew can reject the job as well.