It feels like DSCR lenders are catering to BRRRR investors more now than ever with short seasoning guidelines, air tight DSCR requirements (1.0), etc. 

I guess for me the dividing line is does it damage the function or cause a safety hazard if I leave it on the tenant.  

In each category, note how much you are bothered or stressed on a 1 to 5 scale, with 1 = not bothered at all and 5 = stressed out: Pain Points Stress1 to 5 Pain Points Stress1 to 5 Unit turnover Exterior maintenance Advertising for available units Deferred capital expenditures Tenant screening rules Plumbing or electrical emergencies Tenant selection / discrimination rules Mortgage payments Documenting move-in conditions Bookkeeping and bill paying Documenting ongoing conditions Taxes and insurance premiums Dealing with tenant complaints Risk of late payments or non-payments Dealing with neighbor complaints Risk of property damage or vandalism Mold, termites and rodents Premises liability Interior maintenance Evicting tenants If your completed table has mostly 1s and 2s, then congratulations—you are a happy landlord!

I finally told her to forget it and relieved her from the 3k she owed me in damages and late rent.

. :) To answer your question about legitimacy - how do they get to $125k in damages?

I was able to convince my lender to allow me to do an air pressure test of plumbing lines, it passed and so I provided that info to the lender and they accepted it in lieu of turning on water.

Imagine someone harassing your girlfriend, damaging your property, using or selling illicit drugs, dog biting you or your other tenants and creating a flea or noise issue, or any number of other potential issues.

For replacement canoes that got damaged by straight line winds.  

Maybe they are good people and want to pay for the damages and remove the remaining tree?

The fact its in a landbank tells me that it was taken back for some reason, which tells me its likely not a high commercial demand for development, but I could be wrong.If it is "on the main drag" in this town then I'd think doing a new build home to do a targeted and intentional air bnb would be the best bet.