My passive income is much less than my salary and bonus was, when I compare them before taxes.   

Yes, I can research online, but nothing compares to discussing real experiences with people that have actually done it.

The option money may be non-refundable but the amount will or will not be credited back to you if you do close on the property.Another item you mention is disclosing a defect-Texas has implemented some very harsh wording that states the Seller has to disclose, and if by chance the Realtor is aware of the defect they need to make sure the Seller has disclosed-lets face it we are all scared of any legal action. 

If I understand you correctly, you are suggesting that I need to consider if paying taxes on this deal is money well spent compared to a deal that I could get OPM on?  

Have them bid on the work you want done so you can compare prices and ask to see their previous work/make sure they are licensed, and can sign a liability agreement, protecting you and your business.

Look at the comps and see how well homes with converted garages sell, how do the days on market compare to smaller homes that have the garage. 

I'd love to chat some time and compare notes.  

I've owned both since 2013, I self manage and these two properties take up 90% of my time compared to the other two that I own farther out.Appreciation has been much slower than I had anticipated; there are still a lot of distressed sales in 30318.  

Multi-family properties are the best for buy and hold in Bakersfield because the price per square foot is lower then a comparable single family home (so they are cheaper to purchase) but you end up getting a lot more rental income because instead of collecting $1000/month on an average sized house, you collect three monthly rents of $700/month for an average sized unit in a triplex.  

If thing is going well then i am expecting 17% ROI this year instead of 0% compared to last year.