I don't mind showing a house while we are still painting or cleaning or repairing. 

I'm not sure there's enough juice to squeeze for that.Maybe a "master lease option" with a mix of repair options: ie: if it's an expense above $1000 they have to pay for it otherwise I would?

Monthly Income: 1100Expenses:•-Repairs/ Maintenance – 50•-Real Estate Taxes – 112.50 (1.2%)•-Insurance – 30•-Vacancy Costs – 83•-Capital Expenditures – 100•-Total Monthly Expenses: 375.83 Downpayment: 18000Loan Amount: 72000 (with 20,000 rehab money)•-30 Years @ 5% interest Closing Costs: 4000Total Initial Investment: 22000Monthly Mortgage: 386.51Cap Rate: 9.54%Monthly Cash Flow: 329.32ROI: 17.96%After evaluating this, if this property was in a better neighborhood with less crime, would I be naive to pursue this property?

The only thing I would look more closely at is the repair budget. 

The lady doesn't have the money or the mind set to make any repairs.

But we really do try to help them get ready to buy our properties by connecting them with a mortgage company that helps repair their credit so they can get a loan.

I saw you have $10k for repairs.

Say you have to conduct repairs if you have to.

For example:1) Appraised value (What the banks feel comfortable lending on based on recent sales)2) Market value (What buyers are willing to pay for the property)3) Assessed value (What the municipality thinks it's worth for tax reasons)4) Zestimate (What Zillow thinks it's worth based on an algorithm they think is right)5) Larry the contractors value (70 Percent of market value minus repairs)6) AVM (Core logics number based on comparable sales and an algorithm they think is right)7) BPO (What a local broker feels they can get for the property...

Engineer does not recommend repair - unless it's just for the sake of leveling the house.