@Andrae S Wiggins recommend you upgrade your BP membership to Pro to access the BP Calculators to evaluate rental purchases.Play with the numbers to figure out the purchase price that gives you your target ROI.That's the number you'll need to make an offer at, NOT what the seller is asking.Yes, you will get a lot of rejects, but whoever said investing was easy?

If the sellers aren’t willing to update records or make necessary improvements, it’s essential to weigh the potential risks and long-term impact.

Do people other than tenants in the building have access to the area?

These guys are having fun because there are a lot of scammers and gurus out there selling LLC creation services and Wyoming Trusts and Cook Islands Trusts and if you believe all that b.s. you will end up needing to cash out refinance soon in order to access that equity in order to pay for all their services plus an accountant to keep track of the mess.

You should only be liable for tax on any appreciation since you inherited the rental (minus the cost of your improvements). 

For a smaller piece like that, not sure how creative you can get, but it all depends on what it's zoning is, access, proximity to other things, etc.  

Analyze deals, build your network, and educate yourself constantly.If you have access to unique resources (like a VA loan, FHA Loan, or 401K), use them to your advantage!

This would allow you to access some cash for other purposes ( Tax Free) because a refinance is not a taxable event.

The only other option that comes to mind is to make the improvements and try to achieve favorable rental rates to push the story that 2 BR homes rent for a premium because its unique.

Oil and gas wouldn't be what it is without the government taking on much of the risk through the intangible drilling costs tax credit, and the depletion allowance act deductions, and literally hundreds of other tax benefits, loopholes and direct subsidies plus the fact they have access to public land to be drilled for pennies on the dollar, and the government cleans it up once they're done.