Easily accessible first floor window not able to lock I think tampering.

If not, there is opportunity for improvement there.Cash is ALWAYS king. 

Then you could refinance and reimburse the improvement costs.

Doing a 1031 was mentioned, but isn't applicable because this is your residence at the moment.If you paid $60K+$8200 improvements + purchase closing of $5K your basis is $73.2K. 

Can you challenge the accessed value and estate tax?

It doesn't have heat or a/c but the electrical was updated 3 years ago and the owner/occupier of the property has made a few improvements including siding, paint, wood rot replacement, electrical.

I have improved the condo with capital expenses around $20,000 (actually more but I don't have the receipts and documentation for everything unfortunately).

Another perk is they have access to credit tools like rapid re-scores or updates.

Your way around it if it is fix and flip is to just do work that will increase the appraisal: improve curb appeal, enhance the kitchen or bath, or turn it into an open concept.

In regards to keeping extra supplies. one of the things she requested was a locked closet with extra supplies (clean linens, towels, etc) with a key for the maid so the tenants won't be able to access..she said this is important when you have quick turnovers and there's not always time to do laundry.