That may also make the lending scenario a bit cleaner from a lending perspective, and it would give you two properties to leverage against, should you want to sell one to shore of up capital in the future.

Of course it's cheaper to just paint over the panel walls and remove the popcorn ceiling (which is what I was planning to do), but now I'm wondering whether it's worth the $60,000 investment to remove all panel walls and replace with fresh drywall and fresh paint in every unit. 

I appreciate the perspective!

Granted, this could be solved by us forming more of a mastermind group where we have separate investments, but remain deeply involved in advising one another through things.One last thing - I've switched my perspective on how we'd look at this and my potential partner and I have reached a new agreement that we both like of how this would work.

It took me a year or more to get comfortable during transactions as an agent and from the RE investor perspective.

Updated upper unit with new kitchen, bathroom updates, fresh paint, new windows and new lighting What was the outcome?

There aren't a lot of attorneys who specialize in real estate in our market because there just isn't much money to be made from their perspective, but I would try Nathan first.

Get them out, clean the units up, then start fresh with new tenants that you've screened, placed under your lease, operating by your rules.

The last line is a really good perspective to hear! 

Looking at ARV, looking at sold comps, and even looking at what the seller paid for it, gives a better perspective of value, and, in your specific need, opportunity.