Aside from the risk of taking on the property with tenants, you may also have to purchase site unseen which makes it tough to calculate repair costs. 

I haven't reviewed the Standard Lease Agreement yet, but all I need is the right to sublet, and possibly some negotiated capital responsibilities (owner pays for repairs over a certain amount or split responsibilities on certain expenses).

We take pictures on a pre-inspection only of existing damage, which generally doesn't exist because we repair anything that happens between tenants.

I believe the better value currently is finding a home that needs cosmetic repairs and allowing the PM to handle those and get the place rented out as someone else stated.

I would imagine this would be close to a balance sheet.I'm not sure what my CPA would want, but that looked pretty inclusive since I categorized my transactions into their respective categories, ie property management, and repairs.

I still tried to reason with her to see if we could repair this, but she hired a personal injury lawyer (who happens to be a cleaning client of her) to start emailing me demanding I give her $125,000 for her 1/2 of the business, or else they are going to file a lawsuit.

You can then take some of the profits and buy some quality RE, which will probably just break even for the first years, but that's not why we buy real estate anyway..

Sponsor quality far surpasses the "deal", assuming a qualifying criteria for a "good sponsor" is that they don't buy crappy real estate deals to begin with.Having said that, if a great sponsor is offering a deal you don't like for some reason, don't invest in it--just wait for the next one. 

Any expenses you put in to renovation or repairs are not deductible, but must be capitalized after the property is in service. 

I would keep and organize all of your communication around this issue, including gathering pictures of the unit and the area in question that was repaired.