We were not planning on doing as much as we did, but we wound up gutting it down to the studs and replaced all electrical, plumbing (including the main drain), etc.  

If so, I would see if it was legal to cancel the lease.I suspect that you are inheriting a professional tenant. 

I would locate interested sellers who have >40% equity in their SFH and do not have a contract with a RE professional to sell their house.

I believe it to be a good investment, but wanted to know what the professionals thought of it.

By day I work in commercial real estate lending in NYC, and I'm also a professional engineer, so I'm happy to help the community in anyway I can. 

I had the rental professional sprayed before move in. 

Best advice is to visit the property, and make sure you get your professionals in there so that you can make a risk based "informed"  decision. 

Kitchen Cabinets with fist sized holes, an overflowing AC drain that went unreported for lord knows how long, causing standing water & mold growth along the entire back half of the house (hence the water issue), and we found a nice pit bull puppy (no pet policy) that conveniently ate carpet + pad, chewed window casings and doors in EVERY room.

I've not yet done the math to determine which strategy would save me more money, but the big cons of this areNo primary residence, therefore slightly higher interest rates, 20 - 25% down (but depending on the market, this may very well be equivalent to 3.5 - 5% down in LA).Depends on the quality of tenant screening, but it's probably safer to assume that they won't take as great care of the property as I would.Probably need a property manager, professional or tenant.Either strategy seems to net me the same cost around $1,500 monthly, but I'm biased towards Los Angeles as I can rent to friends which solves a lot of the tenant/landlord issues.I'm not looking for anyone to give me all the answers but would appreciate any insight, food for thought, and constructive criticism. 

So, taking out money out of LLC has nothing to do with reporting the profit you made on the deal.this might be little confusing so it is best to talk to a qualified professional.