Both units appear in excellent condition with my only complaint being the 10ft ceilings.

.  You needed to meet our conditions on rent, deposit, co-signer, use, or other.  You did not provide requested documentation in a timely manner.  Previous landlord/other references failed to provide needed timely information.  We were not able to hold the rental until the date you were able to pay the depositand/or initial rent, assume tenancy, or meet other stipulated conditions.  You did not meet requirements on pets, occupancy, smoking, cars, or other terms.  You did not meet our standards for references, income, felony, credit, history, etc.  Your application was denied based upon a written credit report with optional FICOscore; directions to receive a copy may be obtained by contacting us below.  Your consumer/credit report did not contain sufficient information.  You submitted an incomplete, inaccurate, unclear, or unsigned application.  You did not provide a phone number, call back, or return our calls or emails.  You did not submit the required screening fee.  Other_____________________________________________________________.Submitted Screening Fee:  Since your submitted fee was used in the processing of your application, we regretthat we are not able to return any back to you  Since your submitted fee was not used in the processing of your application, we arereturning/refunding your payment totaling $ _________________.Federal and State guidelines limit us from giving further details other than name, address,and phone number of any consumer reporting agency resulting in denial (by contacting usbelow for a free report copy with right to dispute).

Hard to say without seeing condition, but the numbers look great.  

I wanted to present a thorough and honest look at what is involved in acquiring and flipping a property in the condition this one is in.

The roof was in very bad condition (and the seller didn't want to fix anything).

I mean it was because of the “unsafe condition” of the rental dwelling and not the massive quantities of alcohol they imbibed that was the cause, right? 

You need to verify what condition it's in and what the seller is claiming for yourself. 

Certainly you can shop the house to investors, check Zillow, get two or three realtor opinions, and with the feeding frenzy that exists, someone else may see upside in being able to make a profit for putting in the efforts, and might pay you a retail price for the current condition. 

If not, you should allow her to break the lease and potentially help her move (make the seller give you a credit or have them handle as a condition to close). 

What is the condition of the property?