I’d suggest keeping an eye on the MBS market, as suggested by others, and possibly speaking with a few lenders who specialize in VA loans when the timing is right.

@Robert LindsleyThere's an extremely high possibility that you're going to eviction.

Or at best you overpay and the "designer" buys the cheapest junk furnishings possible. 

Possibly if the house is 3,000sf with the basement and the comps are 3,000sf above grade. 

Quote from @Drew Sygit: We give our tenants as many options as possible - EXCEPT picking up their rent.Exactly.

The rooms are unfurnished and the tenants are very low-maintenance (hardly know they are there). 2+Unit Buildings here and nearby currently sell for $1.5M on average.I bought the property 16 years ago, so my mortgage rate is very low (2.2%) Even though the property is cashflow positive, my bigger play is the average 5% yearly appreciation.I'm looking for others who are interested in house-hacking in this neighborhood. 

When you do that, you can get better pricing and leaves less room for error.The best advice is to push forward as quick as possible, fail forward, and always continue to introspect on what you would do differently and then ACTUALLY go back and implement that change (easier to say than do).

Here are the pros as i see it: easy (no purchase necessary, you know the property), likely prop 13 property tax discount, possibly below current rate loan.  

You need to be weary of that and reduce liability as much as possible. 

Property Managers want to make their lease up job as easy as possible and bringing a property up to like new condition is one way of doing that.