I offered a price based on repair costs and a sale price they could get if they fixed it up (retail). 

Weather it's helping with a fix and flip or mowing multiple rental properties' lawns, I've been around my parents real estate journey my whole childhood.

Last I checked they don't allow ADUs legally that aren't fixed, they want to see foundation for it to be rented out and considered an ADU. 

Had to fix.  

First step is always to cut the water source and fix the leak asap.

Fix and Flip?

4) would this also work to defer gains on fix and flips?

As a lot of real estate investors already know (and newbies may have heard), some tenants are very hard on rental properties. 
One of the biggest challenges is keeping the bathroom as carefree as possible. We all kno...

If rents are truly below market then it usually comes down to: Long term tenants which most owners are ok renewing for lower ratesNot wanting to fix the place up to bring units to market, either interior renovations or exterior renovations.

Why will your rent be LESS per month after the tenants move out and you fix everything up?