Claim they had to eat out and also they had to use laundromat.As a landlord in California, San jose am I liable for this?

That will quickly eat a decade of cash flow or more.Most of what I have bought in recent years barely breakes even, but they are in great condition and very good locations.

So that interest eats into our profit and the profit number we split is slightly smaller. 

Having a bathroom & sleeping/eating while flipping is pure gold lol.

Which isn't necessarily a bad thing and should pay for itself, but you are ripping your guests off if 8 people feel crammed and there isn't enough plates and room at the table for them all to eat together. 

We are not hurting financially if we hold on and eat some losses, (it's great for tax season) so we aren't looking to drop prices any further. 

To be ho eat, I’m quite convinced the issue is real and none of your plumbers have found it.

If I could do that, I might get the property for what I'd originally intended, plus the owners would get some badly needed money instead of a big fat NOTHING by losing it in the auction.  

Imagine you have a fish in the ocean that doesn't eat.

Some things to consider are: if minor maintenance is included, if they file the occupancy tax on the owners behalf, if they hire the cleaning service and if they "eat" the credit card fees or pass them onto the owner.