But right now good deals have dried up.

Many of them are rotting away and the values are swiftly diminishing, while the tax bills are increasing at 18% per year. 

My  contractor has advised that it would be more cost effective to simply furr out the walls and put up a nice smooth dry wall instead of trying to even out/improve the current situation.

I have been in many homes where some of the other signs ( smell of rotting eggs, corrosive bath fixtures, corrosive AC )  do not exist.

I struggle with this as well.I personally think VA loans are pretty cut and dry, I don't want to hear more discussion on how to buy a 4-plex and rent out 3 units to pay for your own.  

Failed to maintain exterior walls of a building or structure from holes, breaks, loose, or rotting boards or timbers or any other conditions which might admit rain or dampness to the walls2.

The inventory is there while it’s drying up for those REO buyers who are waiting for inventory that is never going to show up.2.Pricing.

Next you will want to dry out the area with a dehumidier and negative pressure air scrubber to eliminate any mold spores in the air.  

This means that you clearly have no intention on purchasing this property if you couldn't find a cash buyer and if you can't find one then you're going to cancel the contract and leave the homeowner high and dry.

okay here is a little story about this house. i bought the 1200 sqft house for $14k from a owner, and spent around 12k for remodeling such as a new wooden floor, paint inside/out , window and tiles and some new dry walls.