I just wanted to be precise what I am talking about.

She's an old sick lady and I'm thinking it might be extremely hard to get her to leave considering she's on rent control and paying only $350.  

Tenants are not entitled to lifelong leases (although in SF with strict rent control, they certainly try).

Figure out what you have into the property for total cost and than run a highest and best use analysis.This should tell you whether to rehab what is there or tear it down and build something new with the same asset class or a totally different asset class ( commercial, etc.).Additionally once you find out the highest and best use then look at the TIME required to develop that use and receive income from it or sell off.Some people will get the fire department to do a "controlled burn" on the property and use it as a fire exercise.

Then, the market crashes and rents go down 80% due to some varying factors...none of which you really had control over.  

Currently there is tenant live in with rental control.  

Alexis,I am in precisely the same situation as you.

Tenants have a habit of cranking up the heat and running up huge heating bills that you have no control over.

I invested just short of $4,000 into a digitally controlled water softener w/ 250LB capacity brine tank, and a top of the line Iron Filter to match.

I pay closing costs.10k down.Monthly Rent at current 100% occupancy is $5,710Vacancy 7%: $399.70CapEx 5%: $285.50Management 7%: $399.70Repairs 5%: $285.50Insurance: $316.00P&I: $2,093.60Property Taxes: $375.00Pest Control $150Dumpster $200Total Expenses $4,340.80NOI $1,200.00Debt Coverage Ratio: 1.74Income-Expense Ratio: 1.42%