See also http://www.rhaonline.com/SEQUESTRTION-REDUCINGHAPC... for one example of HAP contract rent reduction.

When analyzing a property I put the rent reduction into the numbers before buying.  

Although the home is currently turn key I'm waiting to see if anyone from this forum can suggest a plan for a possible reduction in loss.

But, I think on average, 10 hours a week would be fair.So, I vote for a rent reduction of $800. 

Netting out closing costs and the second note holder comes close to breaking even.If you think you can get this house for $100,000 (ish), that would require a LOT of debt reduction by both the first and second note holders .... probably something that they won't do.  

Worse-case scenario is that you have a higher tax bill this year from the additional income, but a lower tax bill next year from the reduction in income (since half of the year's income was recognized the year before).

Either repairs, credits, or price reductions.

A ducted system WILL NOT.The reduction in the electric bill will NOT be anywhere near $100.

If you want to update the place you could do it at your own expense (considering the good advice from other investors above) and give notice to the tenants of a future rent increase in accordance with your lease agreement and applicable law where the property is located; pay now and charge higher rents on your next lease; allow tenants to pay and deduct the expense from the rent as a reduction in rent payments for the next 4 months or whatever you decide, etc... etc... several ways to structure it. 

If you can keep in mind that this reputation deserves a discount in the price since it involves you taking a greater risk and you do it with ultimate in confidence, you just might get a reduction.