If you are in it for the long haul, doing it off the books would be ok, but then you run the risk of resale not being what it could be if it were conforming to the neighborhood.

While I am studying for my license, I had been toying with creating a business plan to facilitate my transition to a realtor, and part of that idea included doing exactly what you have suggested.  

The one thing you could toy around with, more for sh*ts and giggles then necessity, is to 1031 exch into an apartment building in SF.

I leased a handful of small apartments in the heart of Denver, jumped in a U-Haul, loaded up my van (and my credit card), furnished them all and then posted them on Airbnb.

The economics of a project like this are total b*llshit:)Between the new windows, doors flooring, etc etc. etc. this whole project was about $12 to $14k that includes labor materials, dump hauling etc.

To be a successful real estate investor over the long term, you need to understand each of these and how to use them to maximize your profits throughout the lifetime of the investment.There are certain conditions whereby I would buy a property with break even cash flow on day one ... in that case I would look to the other profit centers for my return initially ... for example I would buy below retail and remodel to force appreciation (2), and if I chose a well located property in a neighborhood with high demand and persistently limited supply of housing then with time and rent increases (2) and eventually paying off the mortgage (3) I would in the long haul get cash flow (3), and writing off interest, depreciation, etc. the whole time to lower my tax bills (4).

However if you agree to a little higher rent now, I will only raise it to Y."

Speculation in RE is very risky stuff, not something to toy with unless you have a lot of resources (i.e. you can afford to lose big).

Mine was pretty limited until recently and I'm trying to figure out just when to drop this.... or maybe decide that we keep it for the long haul, and eventually tear it down and build a nice vacation home once it's paid off.  

I think, in the beginning, it will just come down to the deals I find and the cash flow they can bring.I'm also toying around with a few niches to bring higher cash flows from properties.