Usually you would expect to extract a greater value out of the property after repairs .The biggest factor here seems to be his health.

With a future buy and hold exit strategy in mind, can you cash-out refinance out of an FHA 203K loan to a conventional one - once 80% Loan-to Value (LTV) is reached, thereby extracting cash out (for the next investment property) while dropping the Mortgage Premium Insurance (MIP).

More power to you if you can extract the back rent from them, but don't be surprised if they see this as double-dipping on your side....which may be leading to their current behavior.

Even if the properties and LLC's are not in CA, if you live in and earn money in CA, then the People's Republic of CA will extract it's pound of flesh in the form of another $800/yr per LLC.

If you improve the property and refinance the seller out at a later date you get the upside.A lot depends on how many opportunities are available for the asset type in the zip codes you want to purchase in.If something rarely comes up and this is a way to extract value in a tougher market it might be worth the effort.

Consider a 1031 and invest the proceeds into some new properties and you should easily double the $600 per month After a year if you want to sell or refinance the properties to extract the cash with greater tax efficiency

Using the cash flow and any extracted appreciation you could purchase another multiplex unit.  

You could REFI/HELOC, extract 75-80%, and use the $50k instead of 70k, and purchase something.

What I found is that most of the professional backgrounds are calls center, scripted, high pressure specialists that work assertively to extract fee’s memberships etc.  

I don't think the intent was to structure an extra $5K into the deal or extract $5K from the deal.