Thanks  for anyone who takes the time to respond, I am trying to make moves and learn at the same time so any help will greatly be appreciated.    

We found the home on zillow, called the realtor, walked the property, put in an offer, it got accepted, so we packed up and moved our family from CA to TX to start this new venture.

Seeing it as a great potential future home, I decided to make an offer.The offer was accepted, and I purchased the house with the intention of staying at my parents' place while renting out the home until I'm ready to buy a duplex, moving closer to my goal.

I'm in contract on a $400K house upstate NY - was prepared to spend $50K on cosmetic changes (painting,  new floors, new kitchen, new bathrooms etc) but after getting the inspection report today here's all the issues I'm dealing with and it's not pretty (see below) How should I move forward?

He would be confident in his ability to bring you deals you are interested in and if you like them then you can move forward with working with him. 

People who know they are getting a good deal won't move.

Especially since people have realized they can turn it into a business and not a hobby. 2 - i dont see people turning their primary homes into Airbnb's. they need to move, they sell them.

I want to purchase another property (preferably multi-family) and move into one of the units to take advantage of owner occupant financing and avoid the 20% down. 

I may however discuss collecting for the pet damage now but not fixing those items until they move out to avoid them having to repair the same items again since the pet damage is likely to reoccur. 

Keep your business, your love life and your next move within a very small circle...and continue to create the life you want.