I'm curious on how best to structure this approach: Who owns what, who gets what, rental income & depreciation (all tax treatment).

My lender who has decades of experience and has seen thousands of appraisals, said the 2nd one is so so far outside the appraisal standards and ethics and would never be accepted by any bank. 

I'm not that professional but I think a whole house filter would filter particulates like dirt but not chlorine. for chlorine you might need a reverse osmosis system for a specific drinking water tap to eliminate the taste as it's not practical or efficient to put an RO on the whole house supply. if skin issues from bathing are a problem you might need a softener. sometimes when kids have eczema doctors actually prescribe "bleach baths" where a small amount of chlorine bleach is added to the bath water. also many of the water treatment systems can be rented so maybe just rent it while they are there. regardless, proceed with data. water test, pediatrician diagnosis (if it's legal to ask for, no clue), and a system that is right for the application. sounds like the tenant is willing to help out which is awesome.

Eventually, he shifted his attention to me, and now I receive the same treatment.

This won't go well as the listing agent has a relationship with the seller, and no matter how ethical the agent, the buyer will be at a big disadvantage. 

@Christina Galdieri I agree with the comments on the window treatment replacement and the floor to be tiled (looks like a small bath of probably 50 or so square feet of floor tile, so shouldn't be too expensive to make it look semi-custom).

They seemed like a nice and ethical group of people to me.

Worked ourselves out of income here lolVacancies lowMaintenance repair requests lowNeed to cause some drama so we can start putting some food on the table lolJokes.It's interesting though how if you do a good job in property management you kind off work your way out of being able to generate more income.I guess it's a good problem to have from a performance and ethics standpoint.What do you guys think?

Well said @Joel Forsythe.Dual representation is very difficult to navigate from a legal, moral and ethical perspective.

These are professionals with additional training and a stricter code of ethics.