That being said it's important to extrapolate the costs you will eventually have to endure down the line and see whether $550 per month per unit is enough to handle these.In my experience, it is not.

Even if you didn't lose the property like @Jimmy Moncrief's neighbor in the 70's, how many years of negative cash-flow did an owner have to endure during the down cycle?  

I expect somewhere above 70% for everything I have endured in 10 years with the Corps and all of that money is going into capital for REI.

The option fee is the fee you pay for the right to break your otherwise contractual obligation you endured to buy the property.

Anyone have any ideas of the likely loss i would have to endure?

Paint is normal wear and tear item.. and over this period of time the cost you would have had to endure with others moving in and out.. 

I would be willing to endure the process to avoid losing commissions since time is on my side.

Canopies here tend to be summer items as they do not endure {multiple} winters well..

The dilemma is how much more upside can this market endure vs. what is the downside risk?  

Even with a market correction, LA real estate will continue to climb in the long run (unless there is a natural disaster.)The downside is the negative cashflow you have to endure until the day you sell.