There seems to be some water damage in one corner due to some water that was coming down from a gutter.

When utilities (maybe just water) gets turned on, city requires an inspection.

Theres water damage to the plywood.

The quality of tenant is the variable, most people that need section 8 are good people who just haven't quite figured out how to improve their situation in life, they just want a place to live and will generally behave if they have a solid, clean, safe place to live.Make sure you check local laws and rules around section 8 so that you don't get yourself in hot water, perhaps get in touch with the existing owner/property manager and see what there experience has been with section 8 and especially the current tenants. 

The city is replacing the main water line at one of our single family rentals.

If so do you want them going down there a lot.For hidden costs expect to be hit by higher water bill fees and maintenance and vacancy. 

The community was presented as a stabilized and clean park but had under market local rental rates.The community is located within the City limits of Declo and has all city maintained water and sewer lines.

Having the same dues for a two bedroom as a studio is unusual though, does the HOA provide water?

So this room has the furnace, water heater, and laundry in it, and they are only accessible through this room.

You want to inspect the foundation, water lines, sewer lines, HVAC, electrical system, roof, termite, etc.