I may allow it, depending on the circumstances.

Unfortunately, I see a lot of borrowers come looking for a refinance with an 800 credit score before reno, and then after reno, it looks like a 580, forcing them to sell a deal for an ok margin when they would have been much better off with a BRRRR as intended.

@Dan Heuschele, sounds like you got your answer, but over 5 years of actively working with over 4,000 LPs, my experience aligns with Brian's.I am sure, as of today, the number of LPs that want out of deals going south is probably much higher than leading into this correction, but unfortunately, if you want out after there is already a scent of blood, the chances of finding a willing buyer at anything more than pennies on the dollar is probably slim to none.That being said, I know Cadre runs their own secondaries platform.  

Under the circumstances, assuming move out inspection was ok, would you return the entire deposit? 

Unfortunately the neighborhood can outweigh the product, which in this case it looks like that is what is happening. 

Unfortunately, I wasn’t fast enough and someone beat me to it. 

They are very similar investments and unfortunately due to unforeseen circumstances I need to sell one of these investments. 

Unfortunately,  that’s not accurate and you can get an owner occupied STR permit in any zoning.  

I do not feel comfortable going back over there after how they acted during the inspection.Do you think they will have legal grounds to move forward with suing or rent escrow actions given the following circumstances 1) "as-is" language in the lease (pasted below); 2) nothing about smell is included on the pre-move-in inspection; and 3) the city inspector was already out and stated there was no violation?

I think it's also worth mentioning that having a Plan B replacement property is also critical in mitigating the timeline risk.Even if the preferred replacement property is already under contract well before the 45-day window.There are many unforeseen circumstances that could result in a deal falling apart before closing, even if things appear to be smooth sailing from the start.