My mistake for not inspecting the property beforehand. Paid 12800.based on google mapsThe property is a mess. Need to clean the junk out of house .. hoarder . Bathroom and kitchen need redone. Large tree in back is de...

Deals like this, with additional income potential (garages, ADU, etc.), could help you cash-flow while you build equity - best of both worlds.Lastly, targeting properties that have been on the market 30+ days could be a good start.

@Kevin Wood: For those temporary and permanent differences accounts, move them to Other Income and/or Other Expenses and see if you the reports works for you. 

CA has the highest income tax rate in the county.

Ensure you collect a proper security deposit (typically one month's rent in Florida) to cover potential damages.Your plan to increase rent next year makes sense given rising costs (taxes, insurance, and maintenance).

How is it for preparing taxes? 

If my target would be low income residents, are there any grants, tax credits, or funds available to help me with the conversion? 

For several reasons (property taxes, politics), I would prefer to begin real estate investing somewhere other than locally. 

The reason not to upgrade, is that you won't get that much more income for the cost of the upgrades.  

From tax stand point I would think you can separate from primary and be okay with IRS being that IRS will not be local code enforcement.