If it's a 50K purchase price and there is a 25K discrepancy, then be weary.

Why the discrepancy in size? 

@Andrew WongYou have answered your own question, first you ask how to monetize if you add AC then later you state that there is a rent discrepancy between units that have AC vs those that don't that is the way to monetize. sometimes it pays to just look at the competition and do what they are doing and not reinvent the wheel.

I've heard stories where the lender sees the payoff of the existing loan, and the new appraisal, and doesn't believe the reason for the discrepancy, and then will only fund 75% of the purchase price, regardless of the appraisal.How do you deal with the lender to make this work?

Also get anything you can regarding late payment records or other discrepancies that occurred during the time that this tenant occupied the property. 

If I remove the P&I pymt from the expenses I come up with $973.50, maybe the discrepancy is owing to the high 3% property tax rate or some of my other expenses are too high?

I don't think a kitchen and bath remodel can explain the discrepancy, so why might this be the case?

How do you explain this discrepancy?

If you were to take part in that property and if the new owner found some title discrepancy it could draw you and whatever other entities handled the property into a lawsuit.

What can explain that discrepancy?