Like anything is sales (and you are in sales even when you are trying to buy a property), the less clean cut the deal, the more likely it is to get rejected.

Good design, clean, comparable with market rates, and professional photos.

A typical turnover can be a month or 2 of vacancy and $2-10k in make-ready costs (cleaning, paint, flooring, appliances, towel racks, vanities, etc. that gets beat up and broken norma wear and tear). 

Hi - I’m relatively new to the real estate game and am just starting to read multiple books involving this topic.I noticed a house being cleaned up two weeks ago, talked to maintenance people, and was in the right place at the right time to talk to the owner.

I know in Washington state a home owner can do their own work including electrical and plumbing, but as you pointed out has to live in the property for 1 year after completion.If you get licensed as a contractor (in WA state it takes some paperwork, filing fee and insurance/ bond, no test, no experience etc.. )  Then you do the work under you contractors license and no holding period needed. 

With small homes you get quick and easy stays with fewer issues, cheaper cleaning fees, higher occupancy, and still great rates. 

And STR is much more involved with high turnover rates so you’ll not only need to post the listing but know how to keep it competitive so that you maximize bookings, of course, furnishing it, keeping supplies, restocked, cleaning, maintenance, And what about consideration to any local STR rules and regulations?  

Dwelling suffered fire damage throughout the interior and exterior affecting framing members, electrical, drywall, and insulation.

Based on the prices that I charge for a similar return, assuming there were clean records provided and not a ton in the way of depreciable assets needing to be analyzed, then $3,000 is a bit much.

Our lender wanted clean financials or they wouldnt lend on the deal.