If you or your wife have any VA eligibility, a VA renovation loan might also be worth looking into.

Keep in mind you will probably have a deductable to pay first.

Right now, the best offers around me are for some 1.3-4 million, that only generated around 100k per year gross, so there would be a high chance of not cash flowing, and paying money, especially with a commercial loan (these buildings have more than 4 units).I was thinking that although the rental itself does not generate money, I would be able to deduct the mortgage interest, and depreciation from my personal w2 income and would be net positive.

So, you get a tax deduction on the purchase price.

A good real estate accountant can save you thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation and tax planning.I recommend finding an accountant who specializes in real estate taxation, business taxation, financial planning and tax planning.You should also consider working with your accountant remotely to expand your options.I would also recommend looking for a accountant willing to work with you throughout the year.

A good real estate accountant can save you thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation and tax planning.I recommend finding an accountant specializing in real estate taxation, business taxation, financial planning and tax planning.Consider working with your accountant remotely to expand your options.I would also recommend looking for an accountant willing to work with you throughout the year.

Yes, you can deduct related expenses including gas, loan interest, insurance, etc. using the actual vehicle expenses method to deduct auto expenses for your rental or other businesses. 

Separate issue is only 13% of CA homeowners pay for earthquake insurance because it's so expensive and the deductible can be really high.What are your re-building costs in your area?

I could be wrong.What you tell contractors is: if you do not separate labor from materials, then I have to report my ENTIRE payment, L&M, to the IRS as your income, and then it will be up to you to deduct materials from that income on your end. 

The deduction is optimized as values increase and can potentially offset the entire net investment (including down payment) for high wage earners.