In order to pass the 2nd test, we will have to 1. replace the carpet, 2. find the door knob for shower door, 3. door knob for oven as well. 

when they moved out I did some cap ex.spending about 3,000 on new carpet and new vinyl floors new kitchen counters and painting.

.$35 per sq ft here in the Seattle area for a cosmetic rehab including tile, countertops, carpet, paint, light fixtures, etc.

The test is intent (which yes is incredibly messy vague and gray).  

I'd rather check out a leak that's not there than the time they didn't call and the hot water heater flooded the carpet in the room next to it.   

If you have to put some work into the turnover - paint, carpet, and an appliance or two, then you are out 2 years of profit every time you have a one-month vacancy.

We had to carpet the stairs and get a heavy duty door closer to control door closure.  

If I would want to sell this house at market price in the open market I would need to probably put 30k into it + would lose money while is vacant, but if I sell it as is to the tenant as is I can get market price (or close to it), collect rent till the day of closing, no vacancy costs, no need to update anything (When I refinanced this house I realized that appraisers do not look at how good is the paint, how new is the carpet, they do not do inspections, how outdated is the design/look etc. ...)He can probably find a way to put 3% down, but his current debt to income is terrible. he is a Veteran.

Even after the class, I have no idea if the carpet is a 5 year or a 7 year asset, but I do know that if done properly (not by me) I can fully depreciate it in a lot less than 27.5 years, and if my tenant trashes it, I can expense the remaining value of the carpet, replace it and start depreciating the new carpet.  

Full renovation @Marc NespoliCurrently we are in the process of demoing the existing kitchens, carpet, and some of the wall paneling.