Those two scenarios are playing out right now at two ground lease co-ops I know of.

On my investment co-ops I ran into issues such as the building changing the rules and deciding that you could only rent 5/10 years or that you had to live there for 3 years before you could sublet (whereas when I bought it had been unlimited), making investors in the building pay a larger share of maintenance than owner occupants, charging sublet fees or some buildings that have started out investor friendly suddenly changed and you can't rent at all. 

Can anyone give me an idea about closing costs and taxes related to co-ops? I

The issue with Co-ops is that they are not subject to fair lending laws, so they won’t need to disclose the reason for a declination should they choose to do so. 

. + Operational improvements: Ops is always the hardest thing… and the quest to operate more effectively is never done.

On top of the financial barrier, the potential buyer pool for co-ops is smaller because most don't allow investors, non-US persons, LLCs, trusts, etc. 

You are correct that the worse the condition, the more value is added by the rehab.My issue with BRRRR is related to the OPs.  I

One of my new tenants was concerned about crowding on the new coin ops I have.

Though much of the city is in OPS, avoiding it is wise when possible because OPS is among the worst school districts in the country.

I'm currently shopping around for a lender that will offer 90% LTV on Co-ops. I