Because the sponsor can fix up the property and drive income, they can likely produce a 14% to 16% IRR, but initially a fairly low cash on cash return, say 4-6%.  

Hi Cynthia,assuming 5% vacancy and $200 per month is set aside for reserves and maintenance, this property will produce about $711/mo in income.  1/3 will work out to about $2827 per year

With literally all attractive national markets peaking or already peaked and attractive deals in very short supply, how have you changed your investment strategy?

Something about seeing your assets face value that attracts me.

My interest in Real Estate (especially in Bay Area) has faded since because I believe heavy dose of deflation should set in sometime over the next 10 years bringing up some very attractive opportunities to buy Real Estate at a major discount (40-60% targets from highs).

Investors often target these buildings for restoration.Class C buildings are the oldest, usually over 20 years of age, located in less attractive areas, and need for maintenance.Then there is a Class D-where the house is in a mediocre area.Hope this helps!

For some reason, we are attracted to the negative.

Would it attract Additional Tax ?

Make sure your investments are producing income.  

Lots of development and revitalization going on at the time and a very attractive cap rate (9%+).