They were able to clean up all of the stuff that was able to be vacuumed but now there is still a decent amount of paint damage to the carpet and other surfaces only in the areas they were doing touch ups.

Given the nature of your question I am guessing that you have some friends or acquaintances who wish to pool capital to invest together in a syndication opportunity and they're relying on your expertise in some fashion to decide if the deal is a good one. 

I'm trying to find a good method for a quick, surface level assessment to determine if a property is worth further analyzing - One that is adjusted for the Dallas market. 

My big concern is that there might be more, additonal code violations that which may surface causing a bigger can of worms.

Uh,...it most certainly can lose money...mostly when on the surface it appears to be making money.Face value may rise quickly, but that doesn't mean actual value does. 

Sometimes good ol’ fashion mail works.

What is the best way to put aside this money safely and in an organized fashion.

Why can't your tenant just get a mortgage for the remaining 50%-80% of the property and just purchase it the good ol' fashion way.

If you're not at 80 LTV yet (75 LTV if this is an investment property), my guess is that you'll be there soon the way the housing market has been increasing.Bottom line is that on the surface saving $100/mo might sound good, but overall I am going to guess that the cost won't be worth it. 

Just looking at this on the surface, I understand questioning the age of the HVAC and water heater.