This put is substantially behind on bills and our mortgage.

However, I will be moving into the property and doing a substantial renovation so can evict and reset rents to market.My concern is not the short term risk of rent control as I have ways around that (mentioned above).

The special allocations must have "substantial economic effect" (essentially meaning that cash flow to that partner could be impacted somewhere down the line by the allocation) When you start getting into partnership tax law and special allocations it is probably a good time to loop in an attorney and/or tax pro.

You're on a promising path with a good strategy and substantial resources for your down payment.

Ab1482 prohibits substantially changing lease terms/conditions.

I also caution in taking on more than double the rehab expense you've incurred in the past - especially with a property that isn't tenant friendly from a parking standpoint; it won't be long before the trekking tenant discovers that trolling for street parking isn't the cruise he signed up for and starts parking in the yard, squeezing in the driveway, or starts claiming defects with the property so he can terminate the lease. 

The auction will then immediately move on to the next property.In any given month the majority of the properties auctioned will be single family houses worth less than $50k but there are usually a handful of higher-value properties that will auction for substantially more.

I feel like this is a solid deal and there is enough income from the property to pay for financing as well as leave me with a substantial cash flow.

Essentially, the self-managing landlord now has a second job in taking care of the property.

If not, it is worth exploring an S-Corp, which would partially shield you from some self employment taxes while also providing a greater base of wages to take a 199A deduction. 199A might go away in 2026, so maybe don't make any radical moves just for the next 2 years unless the tax savings will be substantial.