She negotiated the rent down and I was pleased, thinking it demonstrated she was good with her money.

The trick in your case is demonstrating that the funds were used as a quid pro quo rather than as a primary residence upgrade.I'm sure someone with more tax experience will chime in soon @Natalie Kolodij . 

So, when you hear that some wholesaler got $10,000 off a deal, look to the sale price, the value of the property, from that you can see if they are attempting to deal ethically and legally.Another point too, a Realtor is worth more than an unlicensed straw man assigning contracts, the Realtor isn't acting unethical or illegal, they have competency which has been demonstrated by licensing and they are insured as well as bonded in the event they are in error or do something wrong.

We need investors that are willing to walk alongside tenants and to demonstrate and encourage positive change/behavior. 

“The school has been directed to take specific remedial action to demonstrate that it has come back into compliance with those standards.

Please note:  The Federal Trade Commission is prohibited by law from reviewing financial products - even though these (and the underlying quack mortgages that comprised them) had a demonstrated that one in six of them would never perform as expected - indeed would fail.  

@Tikii WilliamsIf the vendor owns the house free and clear, there is nothing to "sub to", so that is not an option.Vender financing is an option, but you need to be solving a problem for the Vendor - if the house were very run down, the market not moving at all, or it is more important for the vendor to maximize their return than to have the funds all at once.Even when you identify a problem to be solved, there is typically a large educational component to demonstrate to the Vender they will make more money and, potentially pay less tax, if they carry a mortgage on the house.

Can you demonstrate it's a better investment?

They would definitely benefit from attracting someone more successful, experienced and knowledgeable.Unfortunately, to attract someone like that, if you do not already have a successful business or past results, the only way you are going to do that is by demonstrating your knowledge.A 10 year pro-forma Business Plan does exactly that.

Again, if he wants to continue to live there and in the absence of the gas service then he's demonstrating that the unit IS habitable and while he can ask for whatever he wants (and may get something) he's not entitled to it per CA law/code for something that isn't habitable.