I would partner with a professional REA who can give you and your partner a realistic idea of what you can afford and how much the "cost of money" will be for you two considering your individual situations.

Assuming your market is out of wack with that pricing, which CA always is, you do not invest.Owners of rent controlled properties are in a very difficult situation, as you will also be in if you buy, so your goal is to take advantage of that fact.

I know there are ways to avoid this in the future, but I'm hoping to find a solution for the current situation. 

How would i handle this situation.

Another investor may have hit a market the year before, but since then, some other people have become motivated sellers because their life situation has changed.

Seller situations change all the time. 

I added the sewer/trash/water because I would prefer to pay my own to avoid lien situations w/TPU.

I think your first move should be to get your financial situation a little more stable, which should be fairly easy for a college educated individual in this economy.

Trees are a liability if it looks like a dangerous situation.

Just let them know your situation and they will be able to advise you as the best structure to set up to meet your investing needs.