Objective is to is to increase cash flow.

Then they buy the house, they pay to rehab it, etc.In scenario #1, you're paying a marked up value for a property, but it's already done for you.In scenario #2, you're paying cost for the property and rehab, but you do need to factor in extra time/risk for the rehab.So neither is inherently "bad" or "better", it's more about your goals and objectives.

I object to the income tax system.

Personally I would invest in Value Add Storage Properties but what you do will depend on your area of expertise, interest and as importantly your investment objectives. 

You are going to have a difficult time building trust and finding someone to work with you if the main objective is to beat down cost. 

Our objective is to purchase at least 1 x 2-4 unit property in the next year and to pursue larger multi-family deals to follow.  

If you do and he objects and pushes the deal, I guarantee you, you will lose.

Point being, price overcomes all objections.

The cost of your upgrades in many areas here will be higher as well as people will be in search of the HGTV style unitsUnion City is a solid bet, mainly fixer uppers, but be careful not to over renovate and make sure you are comfortable with the vacancy rates (similar advice for West New York)Newark is probably going to show you your best return the taxes are low as are the prices of many of the properties but make sure you work with a person that knows the area and puts you into the right section & property for you and your investment objectives (similar advice for Passaic)Also look at Secaucus, Lyndhurst, Rutherford & Clifton.Good luck

I don't ask for the account number because I don't need that, and most tenants would object to providing it anyway (even though you could easily get it from one of their rent checks if they ever happen to pay by check).