The people that are going to get crushed are people that buy assets that have negative cash flow and are speculating/gambling on appreciation.

That is speculation and gambling. 

Such a large market presents a potentially lucrative opportunity for real estate investors—as long as you understand a few unique characteristics about this demographic.Consider location relative to campus accessibility.

Basing everything on appreciation is speculation ie gambling.

It also depends on the physical characteristics of the basement, as others have pointed out - fire egress, ceiling height, window size, etc. all matter and affect whether the city will allow the occupancy. 

To me it would only make sense to keep your current property if you believe there will be more price appreciation on this property than another one you could buy with more cash flow, but that's a gamble.

Some parts of Northwest Ohio have the characteristics that you're looking for.

Hello @Aj,Since I do not know your investment goals, below are the characteristics that I feel represent the best types of investments.Sustained profitability: The property must generate a positive cash flow today and into the foreseeable future, in good times and bad.Appreciating: The price and rent must increase at a rate above the rate of inflation.Low Operating Cost: In a location where operating costs are low, and regulations favor investors.Notice that my goals do not specify a type of property because the property type does not matter.

.- Cap gain rates increase is only for incomes over $1M- 1031 repeal is only for gains over $500kNo details on either of those thresholds are yet available, so we all have way more questions than answers.Preparing for something that may or may not happen and has no defined form is a gamble.

I had the capital and I did enough research and I didn't feel like I was gambling.