@James Wise thank you for the thorough explanation.

The HOA has had numerous issues with these tenants and are also pursuing financial relief for other problems caused.

The only explanation/reason I received from my PM was "the tenant played the system"; but I have no idea how.

@Jake SnavelyI've invested in numerous Groundfloor loans made in Alabama.

I had numerous relatives die over a period of several years to allow me time to do real estate.

I’ve sent him numerous emails stating that I will pay him in full when the work is done and specific issues are corrected, but he’s refusing to fix anything and just demanding payment.

Well You’ve got numerous problems with your calculations but to spend 40 grand and get 600 something in rent Is a deal killer in itself ... and  Are you sure that you can even get a 30 year loan on a 38k house  because Banks don’t lend under 50k a lot of times . 

I've heard on numerous podcasts from BP and elsewhere that it's not illegal, nor do wholesalers need to be a licensed agent in order to wholesale.

If you had to guess, what would be a good explanation for why the seller listed the property sqft smaller than actual?

@Carlos Garcia I usually get multiple pictures and an explanation of what needs to be done, I then give my approval via email and/or text (even if I give verbal approval over the phone), I like a record of exactly what I'm approving.