and CA will want you to pay tax on the profit associated with the time the predecessor property was in CA.

Two identical homes located next to each other would come up with the same value, even though House #1 was just renovated to a very high standard and House #2 hadn't ever been renovated since it was built in 1949.I always tried for an identical (or nearly so) beds, baths, sq ft of living area, garage and acres. 

You evict them and sell the property to the next end buyer.  

Would it be a good idea to take a deposit to secure the deal until the rule clears?

Each property is estimated to create about $70,000 of profit over the next 3 years.  

It is always better to have the tenant paying for the utilities as they are the ones using them. 

Competition with owner-occupants and the age of the homes (70-120+) will squeeze your margins and expose you to a fair amount of risk.

You can be the money partner, and the other partner can manage the operations and then you can both split the profit. 

Tenant just moved in and is asking to delay rent payment until next month, looking for the 10 day move out form

Here is my account LOL, I don't know why it logged me in the other way without my account connected.