way below market so taxes eat up cash flow?

You will want to make sure you arm yourself with the data and prove you gave it to them otherwise a tenant advocate attorney will eat you for lunch.  

There are plenty of people that do a couple flips, eat the taxes, so that they can build up their saving for a larger down payment later.

I'll leave that to you and your tax professional...Valid point, which basically means: by taking a deduction now, you eat into your 199A 20% deduction.

So what will happen to the global economy if the U.S catches a flesh eating bacteria?

However the Phase I is about $2500 - I suppose I should eat the cost for peace of mind now instead of scrimping now and regretting it later.

If they balk, they don't get the job because I'm not going to eat their tax bill and I'm not playing patty-cake with the IRS.Keep smilin'Dennis

Eating at a restaurant does not mean you lost and the owner won.Buying a shirt, the same.

Cash-on-cash is your only metric here that may matter, and it's simply for comparing properties side-by-side and asking what the best use of your limited dollars is...Anyway,Your closing costs will be closer to 2% of the purchase price: $5,800 (unless the seller is covering this...if so, good job)Repair cost of $1,000 won't do anything...contractor fees will eat 50% of that...if you are renovating, you need to renovate to drive rents...$4k per unit will maybe do paint and carpet...a few fixtures. 

And somewhat close to polar opposites on the not important stuff like she loves hot sauce on everything, and I will not eat it at all.