The mistake could be costly.

I do understand all recent syndications are struggling with costs and tenants struggling to pay, so trying to be patient for now.

You should only be liable for tax on any appreciation since you inherited the rental (minus the cost of your improvements). 

A good real estate accountant can save you thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation and tax planning.I recommend finding an accountant specializing in real estate taxation, business taxation, financial planning and tax planning.Consider working with your accountant remotely to expand your options.I would also recommend looking for an accountant willing to work with you throughout the year.

I am trying to get a good hang of the rehab costs since I’m new to the are (from Dallas).

It's the cash you put in that's your cost for the property. 

Additionally, cost segregation and bonus depreciation can accelerate tax benefits.Because filing as single taxpayers limits certain deductions, planning in advance ensures you maximize benefits while avoiding complications.

Double the cost of that house and double the rate to 7% and its like $4,000 per month for the EXACT SAME HOME. 

So, what is my most preferred to least preferred, it all comes down to cost of capital.  

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.