2) Out of these items, which are the most important to push to get addressed:- Ceilings have minor cracks in them and seller doesn't want to address this...not ideal but should I push on this?  

Ideally we would like to continue get enough buy and holds to do this.  

I think realistically I do not want to pursue an out of area deal, and because rent is so high ideally find an off-market deal in Santa Cruz that would allow me to house-hack.

I know it isn’t ideal but I really feel like it would be a good starting / learning point.

My decision would be no for multiple reasons determined by my official and personal reasons.I do not rent to anyone relocating as they will often choose to move to a temporary apartment with the intent of then seeking a more ideal unit to move to. 

Ideally, the loan should be as low as possible when starting out. 

We are having a tough time finding ideal real estate deals to get started.

It all depends what you can afford and the area you are investing. 4 fam will be ideal but do you have the money for down payment, closing costs and reserves for the unexpected. if you do then go for 4 fam. 

This makes my business look like it's making less money than it really is.So how should I deal with this from an accounting perspective?

Ideally, if I found a home for about $30-40k I could purchase it with cash but wouldn't have too much left for any potential repairs (and of course there would be some).