The owner seems to want to not lose ownership of the account altogether.

My recommendation to serious real estate investors is buy an opportunity in any segment, do the math (it's all about the ROI; some investors fall for the 'commercial' is more prestigious chest thump to find that losing money isn't very prestigious at all), and plan on proactively running a business. 

Have you ever heard of a Landlord being sued by a Tenant and losing property?

Are you able to use it easily, only with a HELOC.If you lose your tax deductions, then Uncle Sam is happy to take more of your money each year.Good Investing...

This also leaves me with $3,750 stuck in the deal (not including financing and closing costs, which could easily add another $20,000).In total, if I had to include closing costs and financing costs, I’d have about $23,000 (if not more) tied up in the deal and lose close to $700/month before accounting for expenses.

You will lose the capital gains exclusion by doing that.

Let's assume that the neighborhood is a C class and the median income of the city is greater than 3X of the market rent.Here are some of the considerations I've come up with so far:- Units are in need of renovation and capex is too high or not available- Unit quality is not the same as market - Seller is worried about losing tenants due to increase- Vacancy rates are high or filling units have been difficult- Rent increase would take multiple increases over multiple lease periods to get to market rate if seller is trying to retain the same tenant- Seller inherited property and just want to liquidate- Seller needs to liquidate quickly (financial burden, sickness, quick exit from land-lording)It seems like I might be missing a warning sign about a deal if they are selling with current rents that are under market; but again, this seems to be most of the properties I've underwritten.And in the same vein, what should I be worried about when purchasing a deal with under market rent with the intention of raising them after purchase. 

Higher risk structures can achieve higher IRRs, but can also break even or even lose money.

I have seen these circumstances; people die, go out and buy a car, lose their job, etc… Just my own two cents, I’m not an attorney, just play one on TV

There are people here who have no problem losing hundreds to thousands in negative cash flow monthly.