I did want to address the two items above from an insurance or loss prevention perspective... 

But pretty much, those penalties are more of a suggestive than that of implemented. 

Has stop most preventative maintenance unless something bad happens.  

It is just a lot of money to fix this type of problem that caused by trees and there is no way to prevent it from happening again...

Thus there are things like Regulation S to comply with to prevent flow back to domestic folks.  

Its not the full duties of PM - I don't have to worry too much about monthly reports as I just hand over collected rents and the owners do the rest - so its a great opportunity to learn.I'm really excited to implement many of the things I've learned here on BP.

My concerns are keeping the home will be an endless money sink in repairs and updates instead of asset, cost more than it makes by preventing access to something like a VA loan on a better property in the future, or overly distract me learning details about the market here that won't help me in SF.The home is 2 bed 1 bath, 1200 square foot, one and a half story SFR with a garage, storage shed, fenced yard, w/d hook ups in the garage. 

Banks are pretty conservative and have developed guidelines that prevent unnecessary risk.I think you should add talking to a lender in your mix of real estate professionals and do it early.  

Replaced back flow preventer and water feeder to the Boiler: $6252.

You now want to remove Buyer #2 from the equation, which seems reasonable because he is not moving forward on the deal and is preventing the Owner from selling her property in a timely fashion.Is it possible/legal for you to mutually agree with the Owner to terminate your contract to buy her property, which would then nullify Buyer #2's contract with you?