It is sad to see the lack of leadership across the board and both parties.

And I got a tenant bothered by a neighboring tenant partying into the night.

Coming from the town myself, I understand the problems they caused, but the solution is to address the problems (partying, unreasonable traffic, poor upkeep) and still allow the use. :/  

How many parties involving alcohol di you think happen at an average rental every year versus an Airbnb?

You need to check party wall agreements for connecting properties to see obligations there. 

Do we involve all three parties in the sale?

I would not give anyone money until you get it in writing from all parties that everyone agrees what the deal is. 

I understand that often this situation ends with an agreement for each party to take a 50/50 split.

The first fixer-upper or two will be a bit of a learning curve for all parties, your contractor will begin to get a better sense of the type of rehab you do and soon you'll be able to more or less standardize them over time which helps you get accurate estimates.

@Jason Merchey, chiming in here on the last part.  I