Any gain left after the depreciation recapture is taxed at capital gain.This is little simplified. 

He is currently asking 150K and rents are $1300 month.I know the owner from church, and am guessing that the place is paid for, and he is selling partly due to simplifying his life as he nears retirement. 

:So let me simplify this.

I don't want to pay for 14 appraisals - that's 10% of the total.My goal is to simplify bookeeping.  

If the software is not simplifying your life or making you more accurate, you shouldn't use it.Software does have extremely helpful features like online payments, marketing syndication (click a button and your property is advertised on multiple sites), electronic document review/signing, maintenance tracking, and owner reports.

I'll have to simplify it a bit for what I need to use it for, but this is GREAT.

This simplifies property management and provides legal protections for landlords.Proximity to Los Angeles: Since you already live in Los Angeles, investing in Arizona offers the advantage of being within a manageable distance.

Simplified example:Purchase price : $100kDownpayment: $20kCapital Improvements: $10kSold price: $150kYou paid into the property $30k (which is your cost basis) and Profited $20k which would be taxable income.$20k to be taxed on Ordinary income rate (dependent on your other income sources) AND subject to self-employment income tax (consult with a CPA).

This is the simplified version.As for which market is best?

This may be over simplified but the way I do driving for dollars is I keep zillow open as I'm driving and save all the homes that show signs of being vacant or run down.