Austin (where I live) has not been attractive for some time now, as the inventory is still overpriced and sellers are slow to adjust pricing - which I understand.Houston on the other hand has numerous areas that are still a value from an investment perspective.

When someone loses their job, gets divorced etc, section 8 will pay up to 100% (if not already at 100%) of the rent and can adjust it pretty quickly.

Just adjust your numbers on your offer to account for the difference.

The 2nd appraisal they ordered is full of problematic adjustments that aren't even consistent between different comps. 

I don't know, the new structure has been working fine in the commercial space so I think most agents will adjust.

I would the adjust my offer to account for the repair.

Take your net sales price minus your adjusted (depreciated basis).

Feel free to review and adjust the numbers to gain a better understanding of expected performance. 

Hold periods need to be adjusted.  

If you can get the adjustment you need to cover all or most of the structural damage, the numbers start shaking out better.