That is unfortunate how they let the house deteriorate and a large chunk of money to be paid out at once.  

We also made necessary repairs which somewhat changed appearance of the foundation (there are now bars which hold the foundation together and prevent further deterioration).

Water causes problems from deterioration to mold.

I don't spend much time on the forum any more....when I stopped it had become a big "bash VRBO" frenzy and I got tired of people using Homeaway's (VRBO's) forum to bash the company that created it.Not to mention that I was one of the people involved with the creation of that forum and hated to see it deteriorate from a place where people could come together to share ideas, help each other and communicate directly with the staff at HA/VRBO to the negative space it had become.But, their tools are still helpful!

I was hoping it would deteriorate on its own but I am ready to open up some walls down there.

In the HUD LBP addendum, there's an inspection contingency that reads:The Purchaser has a contingency period that expires fifteen (15) calendar days from the date the contract is accepted by HUD to conduct at the Purchaser's expense, an independent lead-based paint inspection visual assessment for deteriorated paint or risk assessment. 

The tub has a small leak, but I believe the leak is from the metal drain that has deteriorated and there's a piece of it missing that forms the seal.

You'll also want to ensure you have a good property manager to look after the upkeep of the property if you are not there to notice anything deteriorating or which may need attention.This article goes into a lot of the considerations about whether to form an LLC or not: https://www.mmpph.com/wp-content/uploads/2019/04/May-2019-newsletter.pdfCreating an LLC in California would cost you a minimum tax of $800 every year.

@Aimee Brandner, I agree with @Wesley W. that once things deteriorate to that point they likely won't improve.

You'll also want to ensure you have a good property manager to look after the upkeep of the property if you are not there to notice anything deteriorating or which may need attention.This article goes into a lot of the considerations about whether to form an LLC or not: https://www.mmpph.com/wp-content/uploads/2019/04/May-2019-newsletter.pdfCreating an LLC in California would cost you a minimum tax of $800 every year.