House needs some painting, carpet, yard clean up, etc.

Figure out what you could buy it for that makes sense for both of you, rent it back to him, and just make this a clean sale.

I'd rule out the STR in Van due to 1) price/cashflow 2) unfavorable policies 3) Like you said, its big capital locked up for a small property with limited usage 4) STR is either a TON of upkeep(cleaning, marketing, etc) or a TON of expense related to prop mgmt in an already tight cashflow scenario.  

Much easier to clean.

We also have our cleaning crew check all doors and windows to make sure they are locked during turn overs.

They were clean, neutral colored walls with black appliances in one unit, and white in the other.  

We're hoping to salvage the appliances and perhaps replace them after the next tenant but that all depends on how clean we can get them.I've yet to come up with a simple landscape plan (not my strength) so if anyone has any great ideas, we're open to hearing them.The house was built as a 2/1 and at some point (I believe in the 80's), the garage was converted to another bedroom/living room with a fireplace. 

If they were to be responsible for damage, you would then be able to first lean on their coverage to pay for damages before having to rely on your own coverage, keeping your claims history clean.  

The previous tenant had it cleaned but it's still bad. 

To clean the rift raft out.