I have hired a lot of people over the years to manage my properties and I have never paid them an additional fee to re-rent the property.

You should speak to attorney about this option.If you really want the home and want to avoid the drama then you should review the report, see if the items are something you can handle on your own and either close on the home AS IS or ask for a price reduction then close AS IS.

Adding an additional panel for the second unit can cost between $5-10k.

Note that conventional loans allow 5% down for multi-families now...It sounds like even with your father's help, you still don't have sufficient funds, much less also having additional reserves...What, may I ask, is your job? 

Additionally, investing out of state diversifies your portfolio and spreads risk.Ultimately, the decision between house hacking in Oakland and investing out of state depends on your financial goals, risk tolerance, and ability to manage properties remotely.

You also get an additional benefit of depreciating the improvement/house over 27.5 years.

The Beltline does add some promise to the area and is currently under construction, but without additional supportive infrastructure, those markets aren't going to change drastically in the short term.

Participation in actively managing the property, in addition to other factors, changes whether or not losses from a rental (losses that may include bonus depreciation) can be used to offset non-passive income (W-2, 1099, etc). ...

Additionally, central HVAC systems typically require less maintenance and provide more consistent cooling throughout the property.

They haven't missed any payments last three months and requested to add additional roomates so that they can be on top of their paymentsI personally think 7 roomates in a 3bed 1ba is little too much for the apartment that also has a shared laundry with another apartment,not to forget the wear and tear with so many people.Should I continue with them if they are keeping the place generally in condition or ask them to find another place within next couple couple of months or so.Interested to hear thoughts from other experienced members here.Appreciate your inputs.Thanks