Start staging your carpet and other things in the garage first so the future guests know you'll be upgrading it.

No additional cosmetics or upgrades will be performed without prior written approval by PM. 2) During Move-in inspection, only "damages" will be noted, along with "new", "OK", "fair", or "poor" as overall indicator for any particular element.

So, I'm trying to get that house upgrade the wife wants, while not just taking it on as massive liability. 

You wouldnt have to spend as much on furnishings and fancy upgrades.

----- The main factor here that you have left out however, is if the $60K in walls is directly and SOLELY responsible for the increased rent to $1,045/unit... if it is then great... if its not, which I'm guessing you are also likely going to do other repairs/upgrades to boost the rent to $1,045 in addition to this then... you would have to factor in all costs for the repairs and then carve the cost for the walls out and see if they still make sense - my guess is that the additional $445 in rent will NOT be directly linked to the walls...

I have a rule of not renting to friends or family and I have broken it consciously three times, once to my mother and twice to friends.

Keeping unwanted roommates, not moving out and upgrading. 

Show them that you want to respect their home and make it a better place for them, while possibly also making some upgrades that increase their standard of living.

If the PM is doing proper marketing you might look at the location,  condition, upgrades and amenities to see if the price is justified.

Solar loans are 30-50k and I believe that amount of money can be used to upgrade the homes bathrooms, kitchen or square footage instead of saving a few hundred dollars on power bill.