The inspector noted some standing water in spots and mud in the crawl space on top of the existing vapor barrier.  

@Serj Kalfayan  -- Welcome to BiggerPockets.Yes, there are other reasons to be investing in better markets outside of Los Angeles (and most parts of coastal California).Aside from the overpriced (i.e. inflated) property prices, you will have low and undesirable rates of return. 

I'm hearing that the areas that the properties are in so far are undesirable.

The flood zone and insurance is always the thing that makes it undesirable.

I used the same technique on a sunken walkway and porch step also with good results.This is called mud jacking (among other things) and I've used it before with good results. 

Depends, if this is a flip, I would cover all the wood with 1/4" drywall, mud and tape.

While large numbers of tenants are undesirable I would be inclined set that issue aside along with the pet issue.

The best tenants stayed and the undesirable tenants left on their own after becoming aware of our management style. 

Drywall mud and paint can cover up a lot of previous damage that may return shortly. 

Perhaps the "free" materials are the proceeds of something undesirable?