Several reasons:  Phoenix is an expensive and hyper-competitive market; your monthly income is $4K which in and of itself is limiting, but even more so with most of that being cash; and your credit score, while not terrible, needs to be raised, especially with you being self employed and a mostly cash income.

do you both have good credit scores? 

Specifically, I would like to understand if I have grounds to claim reimbursement for the assessment fees from the previous owner, given the lack of transparency and accountability throughout the transaction process.I would greatly appreciate any insight or guidance you can provide on the appropriate course of action moving forward to address these issues and ensure a fair resolution.Thank you for your attention to this matter.

For all of the additional work involved, I'd be hesitant to do a STR deal at 10-15% but of course it depends on what your goals are for the property and for your finances. 

Paying a bit over appraised value wouldn't be a hard no for me in every circumstance, but of course I much prefer to capture some equity on purchase, so I'd have to be 100% confident in my underwriting and strategy for the property. 

What are the best course of action do you suggest?

Also Currently taking the NH RE license course with plans to go with Keller Williams.

Borrower is very experienced with over 800+ credit score. 

Or perhaps a foreclosure HUD is selling on hudhomestore dot com.On 203k you can buy with 3.50% down and get a seller credit for up to 6% of the sale price toward all closing costs and some of it can be used to buy the interest rate lower as well.

Within this journey my credit dropped alot.