Anyhoo, my long term goal is to build a rental “empire” to pass down to my children and so on. 

what it sounds like you are asking is illegal in many ways, section 8 laws, local laws, duel contract laws that conflict, there always has been also those out there looking to catch you breaking them,  avoid it, dont offer it, dont entertain it, there is leeway up if the tenant meets certain conditions, say need 1 floor rental, if not rent may be inflated over realistic market, which is what rented at not listed at, keeping in mind sec 8 market rents also include utilities paid, you can usually reach by email fastest, they have set chart, heat type, neighborhood etc, more than listings found online

Finally, two other things that you can look into or talk with your CPA to see if there could be any advantages to you (you may be phased out due to income for some) is the Section 199A pass-through deduction, which would require you to start tracking hours spent on your real estate enterprise, as well as the possible CA SALT tax workaround in case you were interested in deducting more than the $10k state and local tax cap for the next few years.If you need referrals for professionals in any of these areas in the San Diego area, feel free to reach out. 

The water is billed to me and then the cost is passed on to the tenant. 

LLC is a pass-through entity, meaning there's no tax benefit.

I recommend buying into section 8 rental that have already did the modifications or repairs and passed the city inspection.

Hope you get another better offer :) ya my inclination is to pass on this buyer.. normally my wife handles all the buyers but I am working this one solo.. so she can concentrate on the 12 pre sale contracts she already has..

You've got assets you want to pass on to heirs, but do you have a business to pass on to them?

We bought a property that passed inspection and thought we were on our way to a successful rental.

Should I consider taking in the tenant or pass?