We take pictures on a pre-inspection only of existing damage, which generally doesn't exist because we repair anything that happens between tenants.

I believe the better value currently is finding a home that needs cosmetic repairs and allowing the PM to handle those and get the place rented out as someone else stated.

Any expenses you put in to renovation or repairs are not deductible, but must be capitalized after the property is in service. 

I still tried to reason with her to see if we could repair this, but she hired a personal injury lawyer (who happens to be a cleaning client of her) to start emailing me demanding I give her $125,000 for her 1/2 of the business, or else they are going to file a lawsuit.

I would imagine this would be close to a balance sheet.I'm not sure what my CPA would want, but that looked pretty inclusive since I categorized my transactions into their respective categories, ie property management, and repairs.

I would keep and organize all of your communication around this issue, including gathering pictures of the unit and the area in question that was repaired.

Focus on building a network of contractors for repairs, set clear boundaries for house hacking, and take advantage of tax benefits.

Further, we need to account for a $10k “reserve” for what will be repairs / maintenance as the property ages.  

Also, they will NOT stop paying UNLESS you do not do the repairs in the time allotted.

Yes, if you are confident in your numbers....particularly the repair/reno numbers. $20k is not much and will be eaten up real quick.