I think that you are also correct about the owner still trying to salvage his flip by using a "friend" to win a short sale because he hasn't made a payment for 14 months and the interest rate is a whopping 22%.

I will be using a CPA to file taxes, but also want to learn about it. 

Are you using a Realtor?

Do not get sucked into using a Kaba lock, too expensive.

@Aaron K.Thanks Aaron I do appreciate your input as this is my first attempt at using a silent partner.

@Lorenzo Swinton you could also consider selling them both and using the proceeds to scale up to a larger multi-family property using a 1031 exchange... or like others have said, find a lender that will do a cash out refi and use the proceeds to scale up.

Or if your using a sniper method to target a few specific properties AFTER you've exhausted cold calling, text, rvm, door knocking or any other more affordable and quicker method.

Tenants actually save money when using a shared meter, so there's plenty of room for error when calculating how to distribute the charges. 

When you look at replacing it, I'd suggest not using a wooden counter in a rental as this is likely to happen again. 

Otherwise, you are using a contractor who is 'winging it'.