But he's on vacation for the week and I'm curious.I have a rental that has been having issues with clogged main sewer line.

There are posts here on BP to address any issue.

The rehab costs have far surpassed our budget due to some masked  issues(missing copper lines in walls, dangerous wiring almost throughout...all covered with sheetrock) Also, the city is requiring us to pour new approaches at "multifamily" thicknesses; about $9k worth. 

Here are some other things that could go wrong which may cause failures:Unknown necessary repairs (i.e. sewer lines, roof, etc)Not having cash reserves to cover vacancies / major repairsUptick of crime / vandalism in neighborhoodVandalism of propertyInfestations (pests, other)Bad tenants / No tenants / tenant family issue impacting stay (i.e. death, divorce)Rezoning of school districts / Loss of accreditation of school district Insufficient Property Management (not addressing tenants concerns, no notification of repairs timely - causing further damage, etc)Not following market pricing on rental / raising rent to frequently or too much at onceLegal issues (i.e. tenants sue for injuries on property, taxation, etc) I think you get the idea.

How do I know that they are choosing an asset in a good shape, and they don't make up issues to be fixed?

He checked the leak, and it was a slow leak that occurred from a wax ring issue from the second floor.

The issue is that flip transactions are considered a trade or business activity, and if a tax exempt entity like an IRA engages in a business on a regular or repeated basis, then there is a tax known as UBIT that applies to the gains from such business income.

AC is barely working,There were some moisture issues underneath the tub from the upstairs bathroom. 

This is how I am approaching the issue personally:The unit I want to refinance is very similar to yours, worth about 130k and rents for $1375/m.Most traditional lenders will allow you to pull out 70-75% of the appraised value.

When I closed, I knew there were well issues and also knew that connecting to city water was a possibility.