Profit in real estate comes from cash flow, appreciation, and principal reduction....use IRR to calculate profit. 

In general, capital gains invested in the zones through a qualified entity get deferred tax treatment with some reduction depending on length of investment (not zero). 

Do you feel it is better to just go it alone so you don't have to have the issues of a partnership or do the benefits out weight trying to do it all alone?

The real issue: had this been known to me, I likely would not have closed (this wasn't the only issue with the place), at least without reduction of price or final say of damage repair quality. 

If the seller says no to fixing, and no to price reduction then you buy as is or walk away. 

I use the inspection to get a price reduction as well as to uncover issues that may not be immediately apparent.  

It's not because they are making 3% by sending a contract over to a title company/lawyer and are collapsing under the weight of their moneystacks. 

Sometimes if people do not like the evaluation then they can try and stiff the appraiser with paying for it.With an appraisal for a bank, construction loan,etc. the appraiser has standards to meet and can be held more accountable so those reports tend to hold more weight on accuracy although an appraisal is just an opinion and not an absolute.No legal advice given.    

@Matthew Paul I like that expression, but I've never heard of that one - does that come from the Indiana Jones, 'switching sand bags' as weights in replacement of a gem stone/chalice scene?

Excellent reputation, and will add a lot more weight to your offer than a credit union.Also if the property is in DC proper....frankly you have very little chance of getting an offer accepted with an inspection contingency.