Be totally forthcoming about how the property will be operated.

I would use a company versed in this process to manage the operations of the LLC and collect the rents/operating costs for the owners. 

I really recommend you invest with others before operating on your own.

There are other areas in the "urban core" that might be more what you are looking for.

I searched online and mostly found larger facilities, not smaller residential operations. 

Aloha Julian, Just to add onto what everyone has said, 1-4 unit deals (residential) are typically underwritten differently from 5+ unit deals (commercial). 1-4 units are easier to close and you get more money for them because of how DSCR is calculated:- Residential (1-4 units) DSCR = Gross Rents/Mortgage Payment- Commercial (5+ units) DSCR = Net Operating Income/Mortgage PaymentIt's important to note that in both cases above, there are exceptions.

Here is the Order of Operations graphic from the BP flipping houses and estimating rehabs books:Check out the book for a lot more detail...

And, sorry @Andrew Hogan, I have to disagree that 506(c) are higher quality than 506(b).  506(c) only became available in 2013, so there are many, many long time, proven operators that never made the transition to 506(c), simply because they didn't need to.  

It will be the key to most businesses moving forward operating inside of the real estate investing space.

Per core logic average appreciation last year in San Diego.