Quote from @Ricardo Lemus: For a newer investor, a good investment is a property that pays for all expenses with some cash left over.

I pay $875 (including principal, interest, taxes, and insurance) and rent it out for $1,625.

:)As for LTR rental terms, usually we sign a 1 year lease where tenants are expected to pay Electric and Gas if applicable, while the owner typically pays water/sewer/trash with the city. 

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

Speaking with the seller's agent, all the tenants are current on rents and pay rents on time.

If you have cash, you could pay off the underlying loan2.

@Jon D. some questions, the answers may help you better focus.1) Why did you pay your primary mortgage off in the first place?

The only “good news” is you’re paying for last year’s shortage and thsi year’s taxes, or this year’s shortage and next year’s escrow account. 

How much do they want you to to pay, to pay off one of the mortgages (or both of their existing mortgages)? 

If the new owner pays on the loan its not "equity skimming" from what I understand of it.