So it sounds like Colorado is tough to find ski STR opportunities given high cost of entry or STR restrictions.I'll look into NV?

Should I accept it bc cutting costs here will bite me in the end? 

If you realize profit, sales price - purchase (and some adjustments for closing costs and capital improvements), you have taxable income. 

Are you working with a Realtor® or a contractor, both can likely solve your problem as the agent will have access to more data and knowledge of how to run comps, the contractor will be able to give you a better idea of repair costs.

Rental Income Powerhouse: Can the property bring in enough rent to cover your costs and leave you with a healthy profit?

(Of course there are sales costs, tax implications, etc).Thanks!

If so, take photos of the place before you clean it and send a bill to the last known address including any cleaning costs and unpaid rent. 

Instead he would like to end the lease and has decided he wants to sell the property instead.He has proposed refunding all amounts that I have given him plus an amount for the time and sunk costs that I have already incurred into preparing to move in. 

Choice is either buying problematic MF but then problem is the ARV / value add cost ; invest OOS or sell everything.

The 2 beneficiaries can secure & record a lien on the property for their monetary contributions to balance out the percentages of ownership upon inheritance.