You can still find lots of deals that cash flow, hit the 1% rule, and have lots of potential for appreciation.

To do the cash out refi I want(leaving more cash in the deal than taking out) I would only have a $200 increase in the PITI.

They are dealing with more lease turnover caused by deaths of residents, high labor expenses for different levels of care (IL / AL / MC), as well as finding employees that want to do this work.

Build a portfolio, get tax write offs, learn to buy "off market" and find great deals?

What would be your renovation cost for a full gut on this deal? 

BP has various tools to help you analyze your deals (rentals, flips, wholesale, etc). : https://www.biggerpockets.com/investment-calculators7.

I’ve heard horror stories of people who have to tear apart their house because of work that wasn’t permitted.I’m wanting to buy another home and rent this out as a duplex but I’m worried that if I apply for a rental license or anything that’s dealing with the city, they might find something that’s not permitted and we’ll be stuck with a hefty bill.

It's not for me, but I can understand why some investors love it.Investors have been over paying for deals for years in Austin, especially the older vintages.

Most states seem to be going in the direction that they must be hardwired with a backup battery and they must be interconnected.

Once you take down deals successfully utilizing your friends and family network as investors you will have  a track record and can use that success to propel yourself into new capital relationships, some even by referral if you do good by your initial investors.