I do think that prices will drop as the Fed rate increases. 

If that's true, you may not see increases in rent or equity for quite some time.I also wonder if you have a reserve?

You must have basis in your S-Corp equal to at least $0 in order to deduct the losses.So now you have to contribute more money to your S-Corp in order to increase the basis with the opposing entry being a Shareholder Loan. 

IF so you may not be able to refi unless there is big price increase in the market around your area.

They have to be confident you can repay the loan and the equity isn’t going to make the payments.

Start by running the numbers through a comprehensive rental analysis calculator (the one on BP is great), and get a picture of what your real cash flow picture looks like after you account for *all* expenses.I don't know what market rent is in your area, but if you have one or both units at below market value, you should definitely find a way to increase them.But, my gut says this property is still going to struggle to cash flow.

My ultimate goal is to buy and hold rental units and continue to increase my portfolio over time resulting in an impressive real estate empire i can pass down to my children.

You can test how confident she really is in her friend’s ability to pay by asking if she’d be willing to co-sign for him, just to gauge her response.

In most cases, you can increase rent slightly, and get it rented while the previous tenant is still footing the bills.

Duplexes can be build for around $85-100/ft2, assuming middle grade finishes, this does not include land or soft costs.  3-4 unit building would be a decent amount more on a $/ft2 basis due to the use of different code and the increased fire & safety systems.