I've got a long term tenant lined up & the unit is a non smoking unit, which the applicant is aware & fine with for indoor.

This targets family’s between homes, either because they just moved to the area; have a definitive time work contract; current house is being rebuilt/remodeled/repaired; students with “rich” parents; recent separated/divorced who needs space for children visits; Houston medical center stays; etc.  

It helps being willing to talk to sellers/get on the phone and talk to folks in the real estate space in general but the most important thing in my opinion is being an honest and true person.

If borrowing, use a non-recourse loan since personal guarantees aren't allowed.

That might include things like adding units, converting commercial space to residential, or finding ways to boost income (like adding parking).The key is recognizing opportunities while walking the property, and that takes experience.

My non-professional understanding is that those losses can only be used to offset income from that property.

It is also possible that either the folks in charge of the station, or the prosecutor have set a policy of not wanting to pursue non violent crimes, or even not paying attention to crimes against folks who are not local residents. 

You would have to go after the one individual for non-payment and you could only remove the other three by going through the legal process like you would for someone on a verbal agreement, which puts you in a he-said, she-said situation. 

While the image of yours I found seem to show the main entry to the 2nd floor at ground level, the older the prospective tenant, the less interested they are in a non-ground floor unit. 2) Using another part of the property as storage could limit interest and I could see that as a turn off with folks once they find this out.FYI, the listing I found on realtor.com makes no mention of the tenant not having access the entire property or the basement being used as storage.

You'll have more flexibility with non-traditional lenders, traditional will all follow the same Fannie/Freddie guidelines.