You might try requesting more of a description/breakdown of costs from the landlord to see exactly what was done.

Although "Seized" would not technically be the correct description.

I am interested in purchasing a 12 unit building and in the description it says it is a HUD building.

I could see SS fitting that description with the sales of boxes, etc. 

Regarding asset prices, I realize the SF Bay Area is a unique animal (geographically constrained land, bound by oceans and mountains, and it has Silicon Valley as well as difficult development requirements - it's a unique ecosystem, that's for sure) but it doesn't seem to me that rent control has negatively affected prices that much.

@Najat F Kessler from your description it does sound like the second floor tenants are the main issue here.Are they on a year lease?

I know the area, and know that I'd like to be at least 30k under what he currently wants for it based on his description of the property via phone, etc. 

I dont know if MI had finally cycled that inventory as there were thousands upon thousands of homes that met that description but i would say 90% of the US real estate markets are far from this.In fact the opposite.

DSTs allow for investors to 1031 exchange into professionally managed portfolios that are diversified across asset class/sector/geographic, while being a passive owner and earning tax advantage income.

Zero, you can do that yourself unless you are spread out over a wide geographic area