Since its your first deal you would want it to be perfect or atleast make you a small profit (money or experience wise). 

Implementation wise this product looks to be a no brainer. 24" OC framing could be used rather than 16" OC. 1/2 drywall could be used.

It's not a wise strategy for a beginning investor.

All non-accredited investors, either alone or with a purchaser representative, must be sophisticated—that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.506c: a company can broadly solicit and generally advertise the offering and still be deemed to be in compliance with the exemption’s requirements if: The investors in the offering are all accredited investors; andThe company takes reasonable steps to verify that the investors are accredited investors, which could include reviewing documentation, such as W-2s, tax returns, bank and brokerage statements, credit reports and the like.Again, it would be wise to check the SEC guidelines, but sponsors have the ultimate responsibility to ensure their investors meet the requirements.

A 4-plex might be a wise choice on the next one.By the way, you will be much better off having jumped in than the people that keep waiting for the perfect property and never purchase anything. 

How is this acquisition fee classified tax-wise? 

The one over the garage would bother me code wise unless it has the upgraded fire proofing required for apartments above garages.

Where do you want to go from here investing wise?

However I'm starting to think it wasn't a wise investment despite the location & 4 rooms due to resale value in the future, loss of appreciation due to the busy street, higher than typical taxes & future repairs on a 1912 home.Should I back out of the deal as it's too risky?

I’ve been looking into some properties that make sense numbers wise.