You would've created at least 20-25% equity in the property for yourself and would have the option to sell and capture or let it ride on the market awaiting appreciation.

But how should I document this and is there a specific method of capturing this damage so if she should decide to go after the deposit, I'm fully protected?

Not interested in Turnkey btw - I'd rather buy pre-renovation (not post-renovation) to capture the equity myself.

Those that work with investors frequently will turn the repairs around quickly allowing you to get it rented sooner and minimize vacancy (your biggest expense when the property is actually vacant).If you want to capture all your capital gains now without tax and put that into a multifamily, that may also be a good option - but you can still get some favorable tax treatment later even if you go ahead and turn it into a rental - so long as you lived in it 2 of the last 5 years at the time you sell it.Hope it works out well for you!

I had been hoping to close on the house in mid July and race to get it up on the vacation rental sites ASAP to capture the tail end of the high season, but it looks like that's not going to happen.

If you capture additional equity at purchase it gives you more options:  you can sell immediately if you needed to, you get a bigger pay out when you sell, you can get a cash-out refi sooner because you do not have to wait for the market to rise, or you can hold from a stronger position because you should be able to find deals that get more than $200/ mo cash flow.  

This is where you can capture what should be credited or transferred to you at closing.

You'll want one for two reasons (you can decide if this is important to you)1) If you're emailing/mailing people or advertising online, you'll want to direct to your site where you can capture their data (name, address, etc.). 

Is it for immediate cashflow, down the road appreciation, Equity Capture, Debt Pay-down? 

I do think with how much real estate investors (especially from out of state) have been entering the market, we will see property management average fees get lower as they stay competitive to capture all the new demand.