I feel he’s full of bs.I explained to him that he signed a one year lease and that we’ve never had noise issues/complaints before but that I will ask the other tenant (who has lived in his unit for years with zero complaints from anyone about noise) to keep his TV lowered after a certain hour.There is a clause in my lease that says he will have to pay 3 months rent if he needs to terminate the lease early.

On the other hand if you buy 4-4plex buildings (perhaps all located right next to each other) you can use residential financing, a little bit lower interest rate, 30 year amortization, and no balloon.

(if the rent they are paying is not too much lower than market value).  

You are better off with a lower as is offer

In 2008, I noticed that his area did not really take any major hit to home price, maybe stayed same or bit lower, during the recession that hit silicon valley.

In addition, higher costs of living will continue to drive the population to lower tax states.This is really starting to make me consider investing out of state.Looking for some investor input.Thank you

I am wondering if I need to lower my asking price even more, but I don't believe he is super motivated and will accept a low ball offer.All the homes were built around 1950 and range from 850-1100 Sqft.

For government loans, this is typically lower however, you would have to pay a premium up front and carry the insurance for life.

After tax contributions are preferred when you are in lower tax rates. 

That is why the property must be distressed to justify the lower offer.