By forming relationships with these brokers and agents, I (and you) can often get deals before they become available, get deals through first, and often get the best deals.I still advocate that REO buyers should go direct to the list brokers/agents and offer the ability for the brokerage to get both sides of the commission (with two different agents representing each side).If you do choose to have a buyer's agent write offers for you on REO deals, you may be much better off going after 90+ day DOM's, 1st day price reductions, and pendings that go back to active (cancelled escrows).

The $130/mo maintenance reduction would save you 1.5 of it (so 9%) leaving you with a 41% rule for the first 10 years.

Were these homesteaded properties(homestead is a tax reduction for owner occupied homes in FL)?

3) If the junior lien holder has to be satisfied could I work a reduction or possibly transfer the lien to their condo?

A hold harmless letter MAY protect you, but the hold harmless might need to state additional "consideration," such as a statement that the price of the rental has been reduced based on X defects and/or that tenant may use said reduction to pay for necessary repairs to the property as his or her sole cost and only through a licensed professional.

We found a few things that were major violations, brought this up to the seller & came to a solution that everyone was happy with, a little price reduction & a little credit after closing.  

Of course every situation is different and maybe if I had held the first property longer, or if the first property's land were worth more, or if I were in a different tax bracket, etc etc, the analysis might yield a different result.But if my calculations are correct, then I am not suffering from a (significant) reduction in depreciation, and I would much rather deploy the deferred capital gains in my next property than pay them at this time.  

These houses are still settling and the engineered works better.LVT for the basement areas due to the moisture issues that can occur.Carpeting the steps from first floor to second does help with noise reduction.

Then the question really becomes, how much do I want to get hit in taxes and if it's resirable for the reduction that will occur because of the taxes.

I'm leaning towards the "reduction in income" selection as it's true and it doesn't require hardship documentation....Is there high risk that this won't be approved for a short sale because of the condition of the house?