The more reading that I do about the subject, the more that I hear that your experience is a common one with online auctions.

It’s common sense.

Less Competition - High-interest rates and market uncertainty may deter some flippers, reducing competition for distressed propertiesMarket Demand - In some areas, there remains strong demand for renovated, move-in-ready homes.Price Negotiation - Sellers of distressed properties may be more willing to negotiate in a high-interest rate environment.Cons:High Carrying Costs - High-interest rates increase the cost of borrowing, which raises your holding costs (interest payments, taxes, insurance, utilities).Market Volatility - Real estate markets can be unpredictable, and high-interest rates may lead to slower home sales and declining prices in some areas.Renovation Risks - Unexpected renovation costs and delays are common risks in any market, and high-interest rates exacerbate the financial impact of these issues.Financing Challenges - Securing financing for both the purchase and renovation can be more difficult and expensive in a high-interest rate environment.Mitigation Strategies:Thorough Market ResearchAccurate BudgetingEfficient Project ManagementFlexible FinancingExit StrategyFixing and flipping properties in today's market can still be profitable if approached with caution and thorough preparation.

I suspect an experienced local investor would not be scared off by this house because they could physically see and understand how to address the issues in a common sense affordable way.

So far we have painted the common areas and the exterior of the building.

Yes we never had issues with automatic release clauses.

You can create "tenants" in apartments.com and charge them whatever you want so no issue there on renting by the room.

Geico/Progressive do not offer them - they offer homeowner's insurance, condo insurance, renter's insurance and etc, but none of them covers the building structure & the common areas. 

At first refi the owner will have this issue.  

Basically, just looking to see if there is any tax advantage in fixing these cap ex issues vs giving seller credit to fix after closing.