If you don't have a ton of cash flow and no liquidity it can be a really dangerous path.

Assuming your numbers are correct the property is not good cash flow for a rental even using San Diego's low rent to value expectations. 

Correct on everything above, ill just break it down a little further. 

Whereas older housing stock can be more difficult to renovate - especially when it once was a large single family that has been spliced into apartments.If I was to build a Multi-Family property from the ground up, I could control the lay out of the units, where the housing systems were located and their path to and from the basement, I could construct panels to access shower fixtures etc.

If I am understanding you correctly- you need to pay for the rehab costs out of pocket.

So, it will always be labor intensive since the information is often not correct.

While it may (or may not) pick correct comps as far as square footage, beds, and baths, I doubt it knows neighborhoods--sometime just crossing the street makes a huge difference--or condition. 

The most basic and logical explanation for something is often correct, but proving it can be a whole other ballgame.

With mold issues it is always a two part question. 1st is has the mold been remediated and 2nd and most importantly has the issue been corrected that allowed the mold issue to begin.

You are all correct it would not be a short sale.