So, if they are now retired and in a lower tax bracket than you and your brother, they may pay a lower effective tax rate on any taxable income (if any) from the property in your proposed scenario, than you and your brother would if you just bought it and let them live there.

I have been reading that the mid to higher-level properties are valued on cap rates just like apartments. 

We have the 2nd highest Gas Tax in the lower 48.The Governer is trying to put into law, a tax on the amount of miles that you drive each year.A recent poll found that at least 50% of the Residents would leave this State if they could find a way.Raymond

I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property.My question is - I plan to buy two more similar duplexes next year and repeat the same process.

Mark, welcome aboard.BP is a great conduit for RE investment advice and insights.My company is both a private buyer and private lender on lower ARV $ properties throughout the U.S. 

The main thing is to know that the two options you present offer completely different levels of time, effort, skill level, and risk.

Although my company is based in CA and IL, we are both buyers and private lenders on lower $ ARV SFR properties throughout the U.S.Best of luck and continued success.

Below is a breakdown of the financials at purchaseGross Rent (All 4 units rented): $3,200Purchase Price: $372KThrough necessary rehab, and knowledge of the market, I determined I could increase rents, find better tenants, and lower maintenance/my time dealing with issues.I purchased the property through a 203K renovation loan, with 3.5% down, 30-year fixed.

And it doesn't seem that I could get any lower than that.

Because the seller hasn't been reasonable with the price, and I can assure you the agent has been trying to get them to lower the price.