So the plan was then to just repair what we could to make it as valuable as we could get it and sell and essentially take that $40,000 loss, and just go from there trying to invest in rental properties.

If feasible, a different realtor in each area would be best.

I dont know about your area but 10% usually covers the CASH LOSS for about 1 month.  

I personally will never do business with someone who I catch in a lie because as a licensed agent I can loss my license for things that others view as white lies.

This way you will be made completely whole in the event of a total loss. 

The issue is that this individual does not maintain a copy of the lease agreements for any of their property, doesn't maintain profit/loss statements, and can't tell me what kind of maintenance might be needed.

CPA regarding annual tax filing as its normal to have annual losses from the tax deductions offsetting the distributions and they can use those to offset some gains when property is eventually sold.   

depending on who your working with or if your just solo... but LLC allows for unequal profit distributions.. so that's nice... also I think a big benefit that is nice to keep in your back pocket is with an LLC you can have loss claw back. 

The owner needs to give you two documents: P & L (profit and loss) for the past 12 months (the "trailing 12"), showing you all income coming in monthly, and all expenses per month.

I'm not sure where you're looking, but location in NH definitely plays a factor in affordability and feasibility for house-hacking.