Of course, what action you can take depends on the circumstances and the terms of the lease.

Self-management vs hiring out - either one is fine, depending on your circumstances.

If he has an uncommon circumstance that he would like considered only the lender can provide a worthwhile opinion. 

(b) The existence of any fact or circumstance or suspicion of the existence of any fact or circumstance that indicates a property might be or is psychologically impacted is not a material fact that must be disclosed in a real property transaction.

I was told by another appraiser that a lot of appraisers simply do not want to do the extra leg work that is required to find out the circumstances behind the sale and determine if it works as a good comp. 

It's all based on the facts and circumstances of the particular property and each individual asset.

IMO, I'd rather pay out of pocket if I have it rather than pay interest on it (I know people can argue this because you could use it for another deal) but those circumstances I'd think would dictate what route you choose?

You'll never know under those circumstances the actual cost of the building, because you can't tell from his invoices how much is actual cost and how much is in his pocket. 

I have a property that I am interested into purchase and repair, however I need to find a way to approach the owner, who has neglected the property and violations, and would like to make them a cash offer.

If it was on the rolls for 800k, your taxable value would be 800k(Somewhat less than a 25% reduction).Be very aware however that even simple tax laws can become complex because different ones apply in different circumstances.