How do you prevent this kind of a surprise in the future when shopping for investment properties, I mean you run your numbers do all the math and then its all invalid after the purchase? 

It seems that rent control can in some cases prevent investment in rehabbing/improving properties in good times (because folks can't come in, create vacancy in occupied units, and remodel whole structures), and might contribute to an increase in vacancy in downturns, which is something I had never considered as a possibility until today.All in all, this property is a massive, massive winner for this fellow, accounting for nearly 50% of his net worth. 

The owner of the property cannot hide or evade service to prevent the sale.

As long as the market is strong, we charge that small increase to prevent them from getting too far behind on market rates.For turnovers, we're raising rents to keep up with market demand.

Many areas of the market are saturated, preventing much room for rent growth.

To answer your question about occupancy during construction, there is an option in the 203k loan to wrap up to the first 6 months payments into your loan to prevent you paying out of pocket during the rehab.

This is not about Landlords investing wisely; it's about a government that is preventing them from operating their business through nonsensical regulation. 

@Kevin Janssen My initial plan was to completely forbid smoking in the building as well as a specified distance from outside the building (to prevent people from sticking their head out of the window or standing just outside their door) but I hadn't anticipated getting a property with tenants who've been allowed to smoke indoors for years. 

It prevents problems down the road but is also an extra set of eyes for you.

What is preventing you from being one of those people who gets into contract right when one comes on the market?