Too many low income apartment buildings near by / vacant buildings. 

When you sell a property that has been depreciated, the IRS requires you to "recapture" the depreciation deductions, taxing that portion of the gain at ordinary income tax rates.

For our purposes it's all for an income stream. 

On a commercial asset the value is directly based on the NOI (net operating income).

Appreciation is a real thing and not only this the demand for quality low-income housing is real. 

Focus on tax-saving strategies such as cost segregation studies and bonus depreciation to accelerate deductions.By qualifying as a Real Estate Professional (spending 750+ hours annually and materially participating), you can offset your wife’s S-Corp income with real estate losses, reducing your tax liability.

I would apply the cash flow to pay down the debt and hope to have significant passive income (or equity to put into something else) in 10 years.

The guy is meeting the rental criteria income wise.

As a SFR investor for over 15 years I have been wrestling with this question in the past, because it feels like you should upgrade to "bigger".I know for sure that I would not enjoy the ownership experience that comes with a small 4F, because in Milwaukee that typically also means lower income tenants. 

If you have some capital, income, and decent credit, buy a 4-5 bedroom house and rent bedrooms.