Usually the numbers don't work to build in these neighborhoods, unless government tax credits, etc.Do you see the problem with your two statements:"The turnover costs could/will be high"and"How much more damage could they do?"

Pretty much think of a commercial loan process as a residential loan process backwards.Lenders do go off the income of the property, but they also do check out the purchaser...3 years tax returns and a personal financial statement. 

What are the tax ramifications of a sale, if any?

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party. 

Consult you insurance broker for specifics but I found this policy to be very protective and reasonably priced.With regards to an umbrella policy they are typically good to have.  

The surplus line broker shall collect the Ohio tax of five percent of the amount of the premium for the insurance policy at the time the insurance policy is delivered to the insured."

I'm a local real estate broker, investor, and manager (100+ rentals, mostly Airbnb/STR and multifamily).House hacking is a tried-and-true method and in Sacramento you can produce some meaningful income while enjoying the appreciation and tax benefits of owning real estate.

@Pratik as @Neil Narayan mentioned, cash flow is very challenging due to the property values, property taxes, and soft rental market.

You'll likely want to evaluate the investment with UDFI tax figured in.The Solo 401k trust would make the payments to the seller/lender and would also pay for any investment-related expenses.

The home burns and the incredibly over taxed CA FAIR plan has either gone bankrupt or takes years to pay out.2.