So even if OP had tried to go the route suggested ("if you aren't going to live there for a year, then it's an investment property, rather than owner occupied"), that wouldn't have guaranteed a positive outcome. 

The arts are strong there and it has a great food co-op and a brewery.

Roughly backing into an offer price:At 65% occupancy, revenue 170 units at $80 at 65%= $8,840/month = $106,000 per year revenue.Costs as noted above without P/I= $58,000Revenue less Costs w/o P/I= $106,000 less $58,000= $48,000 P/I before income taxes and depreciation expense.$48,000  / 12= $4,000 P/I per month. 

These very quickly grow fast enough to put homeowners into negative equity territory, and as a general rule many homeowners often ignore their house payment problems for a long time before taking action.For the OP - there is no easy quick way to learn short sales.

We gutted the 5th unit in the basement and turned it into a coin op laundry and the other half will be a small office for rent.

You're going to have a hard time pulling equity out of an investment co-op because most lenders will not do HELOCs on them and the co-op board will have to approve your new debt-to-income on that or a cash out refi. 

Don't give the OP false hope.

If OP pulls out for some reason before the parents die, the current owners could lose their 2 of 5 year gain exclusion.  

*Quick tip* Prime corporate services does LLC creation with articles of organization, op agreement, and EIN for really cheap if you say you were referred by someone who uses them.

I've done exactly what the OP does and socking away debt gives you more security, which in turn gives me more options when buying new property.