Should we be more aggressive in purchasing SFH for better tax advantages compared to passive MF investing?

Real estate and stock market investing are not comparable..nor are they alternatives for one set of goals. 

I'm not unhappy at all with the guys I used, just thought the price was steep as compared to other trades.

@Joseph J Deza Midwest would be your best bet.Because you can still find cheap and cash flowing properties as compared to rest of the country.

Total debts come to about $97k, the appraisal came in at $120k, but comparable sales in this area are $85k at best.

It is on a major road, and you cannot compare it to houses that sit within a normal neighborhood.

I would tell them you had made a mistake in thinking there was central air, maybe show them the comparable rents in the area, and ask if they want to be released from the lease.

I often ask if paying $100-125K+, for a turn-key unit, is a more financially effective play compared to buying a rehab/remodel project at discount.

If you think they're not aware of the comps (and why would they be since they probably haven't been looking with rent that low), you could provide them with some comps to show them what comparable properties are renting for and what a bargain they're still getting at $1950/mo. 

Easiest way I would look at Zillow and see what is comparable to your properties that has sold recently.