I bought my first property cash ($45K) and put ($15K) into it for improvements (new kitchen, appliances, paint, turning the attic into a 3rd bedroom among other things).

You want to be really careful to not over improve, but if you can get them looking a little nicer than the surrounding properties, you can attract better tenants.  

As the area continues to turn around I plan on gradually making larger improvements, most notably washers/dryers in each unit and roof decks the units.

I just replied to your PM with my thoughts on the Spanish market (where I live) versus the Florida market (where I invest).

. - More and more of the "bad" areas are getting rehabbed, so over time, they could see some improvements.

Not just due to overall market, but also do to location improvements (BART, up and coming complex, etc.)As you alluded to, be careful with a double ended agent deal, especially if it's your first.

Since you're now trying to improve and resell, it would be best to use seller financing for acquisition. 

If the other 6 all need $2,00 of new appliances and HVAC improvements then that will not be very fun.  

However, with the building being non performing, you need to put in capital improvements and manage the building better than the last guy so it might not work also.If you have bad credit and some capital you have some flexibility.

My thought behind doing this would be twofold:1) I can deduct my home improvement expenses (cleaning, painting, remodeling).2) I can deduct the business loss from my personal incomeCan I do this?