Does this sound legitimate?

Make sure whoever is selling them can provide a legitimate rent ledger showing rent is being paid on time.

They seem very legitimate.

Is this a legitimate strategy?

I wouldn't consider selling until you can legitimately sell via an exchange.

If the items are not broken, and she asking you to change things that she saw on the walk through (i.e. changing ceiling fans, or painting a different color) then I would explain to her that she agreed to rent the home as it is.If they are legitimate complaints (leaking faucets, appliances not working, etc.) then I would fix them - it's something you need to do anyway.

I don't think I'd use the repair allowance for the down payment unless the repair can legitimately be put off...?

It's something to look more into to make sure everything is legitimate. 

Property taxes are a legitimate operational expense are are deductible as such.Income tax is what you pay to the government based upon your Net Operating Income ... so it would be little impossible to include them as an operational expense ;-)

There needs to be a legitimate need for insurance, but the numbers DO make sense if the policy is designed right.