A lot of people who househack do so as a basis for a strong financial future and to build generational wealth and financial freedom. 

If it has any basis at all (such as you left the apartment during your lease term for what you felt was a justifiable reason and stopped paying rent, but the landlord disagreed) then you may be better off paying a rather small settlement.  

So to answer the question specifically no I would not buy a property that did not cash flow and only for tax basis.

Entity structuring, basis calculation (i.e. breakout between building and land), deductible expenses, etc.

In San Diego at the current rates for a purchase loan (which has better rates than an ADU additions) at high LTV, I show 1% does not cash flow on a sustained basis.  

Currently, the maximum LTV for a cash-out refinance on a 2-4 unit property is 75% LTV, some lenders can go up to 80% on a case-by-case basis but qualifications are much more strict (FICO, DSCR, Property Type, Market, etc.).. but it can be done. 

Note that legal and transfer costs are not deductible but can be added to your cost basis.

I wanted to use the camera footage as evidence in a civil case against the tenant.I was initially told that it would take 2 weeks to get the footage to me, then that blew out to several months, and now finally 6 months later they finally get back to me and tell me the footage doesn't exist, even though the initial report said cameras were activated.That footage would have shown that the tenant was making threats to damage my property (which she made good on).Do I have any recourse on the police for failing to provide the footage on a timely basis?

Targeted marketing would come via social media, which is usually priced on a $ per impression or $ per click basis.  

If you are organized enough to forsee hang ups and talk with your GC about potential challenges on a regular basis, two brains are better than one.