For me personally (and from what I've heard from clients), an agent should NOT be afraid to lose a deal, especially if it's in your clients best interest. 

For each month that you don’t have a tenant, you are losing $2300.

Are you willing to lose it all for a 20% return or take lower risk for an 8-12% return (but always have risk of losing it all). 

you will most likely just lose money.to make this work, you'd have to buy something distressed, rehab it, and then refinance so all the short-term funds - HELOC, c/c transfer, etc. - were paid back. 

If the appraisal falls short, I risk losing the deal and my $1,600 upfront cost.Any advice on navigating this would be much appreciated.

Go to local real estate meetups and meet others who keep losing and you won't feel so alone.

BRRRR you can make more money if it goes good, but you can lose more if it doesn't.

sounds completely legal, maybe my friend is crazy and he wants to lose $900,000 There is transfer tax and property tax.

It's possible what you have done on your own isn't even to code or done correctly so you could be losing value if you haven't been careful.It's great that you took action.

You are losing money every month, and you will lose significantly more when they finally move out or you try to sell.The correct answer is to stop trying to fix them.