I still think this could be a good deal if I can get the seller to agree to have a licensed professional take care of heating and air, but I dont think that is going to happen.

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?

Under a county program, I qualify for an income-based first time home buyer loan with these terms:The loan requires 3% down payment  No mortgage insurance  The maximum loan amount is $417,000 Provides first time buyers with up to 25 percent of the purchase price to assist with the down payment and closing costs.When it comes to resale values in these loans, there is a set price value when selling: "The Set Price is calculated as: original price paid, plus annual appreciation based on increases in the Area Median Income (average 2-3% annual appreciation), plus the cost of capital improvements made to the property.Is anyone familiar with these types of loans? 

Request the "official" version, from their accountant, which is filed with their tax return.Other than that, a good property inspector should point you in the right direction as far as what areas could give you problems and what capital improvements you should make to avoid things breaking up later.

Hopefully Indy can use some of the problems Baltimore has gone through with the program to make improvements to the system. 

Those are what will point the right direction for you.The way you protect yourself from a market downturn is to vet the market to make sure it is resistant (i.e. not single industry as Detroit was), vet the neighborhood (improving?