Being an REP shouldn't have an impact on the classification between expense or capitalized expenditure.

The time to address this issue properly was to force your seller to do so before settlement... but since you closed, you now own the issue. 

Not sure if Houston fits into the potential  hurricane impact area or not.

The home already has ducts for its forced air heating, but no cooling yet.

Som people say short-term rentals require more of your time, but you get better cashflow, and are a little riskier because towns can bring down STR regulations that will impact you.  

What legal concerns, financing or insurance impact would it have.

To benefit from appreciation you need to be in the right location and have a long horizon-25 years- and never be forced to sell; that is how investors get killed!

There are so many other factors that impact the final price that the square footage of the property is dwarfed by them - beds, baths, age, style, condition, acreage, garage, basement, HVAC, etc, etc, etc.

I was forced (in a good way) to build a team of resources.

The fact the tenant is being brought to court to be forced out implies worst case scenario to me.