If not, all I see is risk with no reward.

We have done this multiple times as long as both properties are rentals it shouldn't be no problem.   

Additionally you can always write in what was done to correct it and explain that since then you no longer had issues. 

The applicant was initially upset and claimed no other reports has previously caught flagged this.

So basically no money out of my pocket.

You have no more at risk than you do in your own home (where you probably have more equity.) or your own car (where you probably have more risk.) and we won’t talk about if you have a pool or a dog. 

In my day job I do SEO for a digital marketing agency and I am more than happy to talk SEO with anyone who has questions.I'm interested in Long-term rentals, though admittedly, finding deals below market value and funding those deals (not to mention I honestly have no idea have to put the deals under contract in the first place), are problem the first things I'll need to learn.

You want to buy real estate with no savings, which even if you can scrape together a 10-20% down payment, means you will have no cushion to fall back on when the inevitable surprise expense happens. 

If it's rehabbed nicely, then you will no issues finding a tenant.

Generally, a loss can only be claimed in the tax year when the investment becomes completely worthless or when there is a final determination that no further value will be recovered.If the REIT has officially liquidated, been declared insolvent, or issued a final report confirming that no additional distributions will be made, you may be able to claim the loss on your 2024 tax return.