I would tell him as long as he leaves the property clean so it can be rented .you will not persue him in court and you will still give him a reference.

I may come across as a bit harsh here, but if you just bought the business didn't you analyze the rent and tax situation and incorporate it into your pro forma?

Ugh, I hate water issues.Anyway, resident understands that the fix isn't immediate and asked if he could get a reduced rent for his subpar living conditions (collecting the water at the two windows, cleaning it up, keeping belonging away from the windows, etc.).

Be flexible on repair and clean out requests (obviously not applicable when buying a rehab).I hope that helps - and good luck.  

The times I've gone 'passive' and stroked large checks to pros I've had to clean up after them anyway.

On the other hand, my roommate and I are starting a small corporate cleaning gig and we have a client that we will start working with in August who is going to pay us really good money for part-time work. 

Think it won't effect A and B areas--look at the BMW 7's and Escalades tooling around in the tough neighborhoods (they have more than enough money to spend).Forcing people to unknowingly house dangerous hard to deal with individuals (between prison sentences) is harsh. 

the house is clean finished and the tenant lives there want to stay.

The only way I see you being denied is if the property does not pass the physical inspection, which simply requires a clean home with no safety or health risks.

These newest folks are very hands-on, improved landscaping and keep place very clean, so we are leaning toward keeping them, just debating on Management issue).