The extremely damp conditions will infiltrate to the unit/s above and will drastically reduce the useful life of everything in the bsmnt. incl. the water heater, furnace, electrical panel, etc.

Then I would approach the seller about potentially lowering his asking price based on their condition, however if the seller has already stated they are unwilling to replace them, you may find they are also not open to the idea of sharing the cost of replacement.

Your lease should have a clause that states that the unit will be kept in clean, habitable conditions.

Client wanted to list and I made an offer in as-is condition.

Purchase price: $100,000 Cash invested: $1,000 Sale price: $120,000 Bought to flip and found a buyer who wanted it in as is condition.

The house is well kept and in real good condition (obviously I need an inspection), so my "misc" number is small as I don't know what to expect.  

They are both fairly close to downtown (8 min or so)Property A is probably worth around $350kBoth sides rented = $2225 (which is actually decently high for the home and area)Property B is hopefully worth around $500k once the rehab is complete (we bought for $332 in abysmal condition, I don't know how we passed FHA inspection  .... :) )Property B would rent for probably $3500 total ($1650 for the smaller side $1850 for the larger side)Neither will ever come close to earning $1k of rent per $100k of home value so seems to make sense to try and take that equity and spread it out into properties where it can earn more rent, even if those properties aren't appreciating like these two seem to be.

For a single family property, you will have to hold more depending on the current condition of the property, expected vacancy and expected CapEx (for example an HVAC unit which could go out in the next year or two).There are a ton of people who have been waiting in cash on the sidelines for a large market correction for the last 5 years.

If there are tenants in there, I would request current pictures to make sure you know the current condition. 

With the State's financial condition worsening, do you think that there should be cause for alarm, or caution in investing going forward?