In your instance the smoke and mirrors seem to be hiding fatal flaws in the deal.

There is no charring or damage to structure, just smoke discoloring as far as I can tell. 

We have a very hard core policy on smoking / vaping, screen shots below...

And then, from 900 to 1050 in year 2.Smoking is a pain when taking over a unit to turn.

(Assuming your realtor isn’t “blowing smoke”.). 

I am installing wireless, ten year lithium battery combo smoke and carbon monoxide alarms in my rentals. 

Smoking in units, people not on the lease staying there, police called for various reasons, etc...- Almost impossible to get any kind of unit damage paid for beyond what you have in a security deposit The rest of your statements about the homes needing a ton of work, contractors costing the same, and dealing with properties that are very tough to force appreciate are spot on.I personally do not invest in Section 8 housing anymore because they are normally cash flow purchases.  

And when I applied for a rental license it was a really easy process, they cared more about the safety things like having enough smoke detectors and fire extinguisher and GFCI outlets near water, etc. 

“Weare dealing with increasing costs of cleaning up after drugcontamination from smoking methamphetamine and fentanyl in units,”wrote the Archdiocesan Housing Authority.

Things like leaking pipe under sink, downspout that needs securing, sewer vent pipe out to the attic, missing smoke detectors in a unit, loose material, etc. are all very easy fixes that we would be happy to make for you.