I guess the plan is to rip them off a couple of hundred bucks above market rent and try to get them to do the repairs, otherwise I don't see how this is any different than just renting the house out as usual.With that out of the way.

In general the loan will likely have to be held to maturity as the Borrower will have barriers to refinance due to it's low balance.  

I live in Newtown, PA in Bucks County. 

You need someone advocating in your corner.Your insurance company was willing to pay it seems and then found an "OUT" to pass the buck to the contractors insurance company.

I inherited 2 great tenants who always pay on time and are both single mature adults who give no one any problems. 

, pay and have contractor take materials to property and start work5. optional -- consider getting a gift card for a few hundred bucks for the inevitable things not planned for--not sure about this aspect

They will at least send some old retired construct savy guy out there to see if 1,200 bucks worth of 2X10s are actually on site.

Well I think even if you sell the new buyer is going to put those repairs into consideration and you will not be getting the highest price/bang for your buck.

Do you see opportunity here or would investment in Auston give me more bang for my buck?

Even if I lost, say, 2000 bucks a the end of the day - it could be money well spent on something I'd enjoy for the next few years.