I never thought about maybe they are assessing it based on wrong fundamentals such as you said.

Will they base their calculations solely on the income from the two legal units and disregard the non-conforming basement?

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth. 

It's a 3 restaurant package in West Virginia (where we already have a base) and includes 1 piece of real estate.

Following - I'm based in California

How do I navigate taxes on this property between the two states, I only plan to have a rental property in Oregon right now, but I will be living in California.I'm also based in California. 

Reaching out to the community to make sure I'm not off base here to immediately think to decline this offer.  

Across the board, the worse the neighborhood, the better the cash flow, the better the neighborhood, the trade off for tenants base, better schools, low crime, etc etc.

I recommend that you find a trusted or recommended Mortgage Loan Originator (MLO), who can give you options for property-based loans (mostly investment loans) and they don't use your taxes but the P&L of the property.

I'm based in WI and there are several people from NY investing here, some successful and some not---the common thread I see from the ones that are not is that they relied on someone else for information instead of investigating, VERIFYING and doing their own due diligence.