That's great on paper and makes you happy with yourself, but when it comes time to sell small multifamily you're not going to force a double in sales price by doubling the NOI. 

I've said this a number of times before, house-hacking sounds good on paper but rarely pans out as people expect. 

Profile:Investor owned LLC -LLC owns 5-6 properties-Investor normally takes every legal write possible so LLC DTI is high-LLC normally has an annual paper loss wInvestor Personally- Investor owns 2-3 properties not in the LLC-Equity in property 1 is over 70% and equity in others are around 50%-Investors personal DTI is around 15-18%Based on what you see above, the investor would like to tap into the equity in one of the above personal properties. 

You may see it on paper, but the reality is it's going vanish.If you're comfortable house hacking, probably a better choice.

The seller wants to sell it for $50k but has requested to put it down on paper for $5k, so he can pay less tax; the remaining $45k would just be given under the table. 

If you skip this step, the Note is only worth the paper it is written on.

The tenant stated they broke one of the hanging glass light pendants.

This is 100x more true if the property is in a C or D area.I'd suggest reading up on the topic on the forums, where you'll find many examples of inexperienced investors crashing and burning hard trying to do OOS REI...the story is usually the same--they had no experience with REI, they couldn't find any cashflowing properties locally, but they saw that properties in other states (often the Midwest) cashflowed well on paper.

After all expenses I've shown a loss on my tax returns the last 2 years and it wasn't just a paper loss.

Yes, you'll be paying mostly interest rather than principal paydown starting out with the FHA loan hence the better play for you on paper but maybe not on the monthly.It's not too risky so long as you pick your market(s) and do your numbers right.