But if it's struggling, you could end up with a deteriorating property and some really expensive special assessments.

The entire set up of the legal documents pertaining to a mortgage loan is defining legal positioning as it relates to lenders protecting themselves from a deteriorating equity value and borrowers protecting their equity from lenders enforcement of the aforementioned.In small deals with a rather small amount of money involved, from a liability view the investor is often better off structuring the outside investment as an equity investment with a preferred return rather than debt.  

Neighbourhood deterioration, population movement, job market, etc. all influence the value and the profitability of a rental property.Sure, if you buy in low income neighborhood, the downside is limited, but there are many examples of good, stable middle class areas that went bust for various reasons.Of course there are flip sides as well.

More units does equal spreading out your risks and rewards - risk against vacancy, loss, neighborhood deterioration, but also increases some risk - the roof for the 300k property may not be as much as two roofs. 

You'll also want to ensure you have a good property manager to look after the upkeep of the property if you are not there to notice anything deteriorating or which may need attention.This article goes into a lot of the considerations about whether to form an LLC or not: https://www.mmpph.com/wp-content/uploads/2019/04/May-2019-newsletter.pdfCreating an LLC in California would cost you a minimum tax of $800 every year.

Also, the deterioration of their marriage was also thrown in as a "damage" because they couldn't get privacy from their 2 kids in a 200 sq ft travel trailer.* allow them to move back into our condo or another property* provide housing to them for the rest of their lives, rent free.We were finally in a status hearing 4 days before the trial when my lawyer indicated the following:- My lawyer still had no real complaint to defend against. 

Also even if tenants clean their tile bathrooms, most of the time, the solvent people use on tile/grout breaks down and deteriorates the grout and silicone over time, so lose-lose!

The problem with older properties in general is the insulation in the walls has deteriorated from it's original noise level dampening and the floor structure has weakened with age.

I can attest that recently rents went down 20-25% for roommate setups and the market got flooded with inventory from Airbnb units that got vacant (no more short-term), intl students leaving SF (seems like for the next 2 years and with a deteriorating relationship with China, maybe even longer), ppl moving out of town due to covid ("why pay high $/sqft when you can get a better bang for your buck somewhere else 4) tech companies are allowing remote work.

If you qualify for the tax free sale, you may want to take it while you can.If you are afraid of a financial crisis the $400K equity could quickly deteriorate.