he told me that Washington is a private land(hard to buy) or something like that but it seems that my affordable price range of a house is 40k :( sounds to bad to begging with. so ill need my wife's credit score even that she do not work to improve that issue and also He needs her SSN(true?)

IMO the situation could be improved a lot by 1) advertising that the unit is in an owner occupied building and 2) not having your sister initially show the unit.  

A home can sit and sit and sit and sit, until the seller either make more improvements which they usually never ever do or drop the price.

Theoretically, over time, the buyer's credit improves and, when they can get a mortgage, you get paid the balance.  

You are elephant hunting with a BB gun, you need to get out of the jungle and learn real estate.Your questions are so vague they can't be answered without writing several books.Land is always valued with the market approach unless it yields income without improvements, then the income approach may also be considered. :)

Do we make any improvements/repairs or don't bother since they're in the house and happy? 

I could make improvements over time, and maybe some day when I either have more $$ or that golden unicorn buyer comes along, I could even turn it back to single family (though I honestly could never see myself needing more than 3000 ft2).

Think of this as a learning lesson and an opportunity to improve on a process with the pm.

I worked 10 years for the consulting arm of a big 4 accounting firm, helping Global Investment Banks, Insurance Firms, Multinational Asset Managers, and Hedge Funds improve their back office operations, specializing in implementing investment performance measurement systems.

Two ways I believe, % of value  of the improvement and actual cost.