The article mentioned several houses that got purchased at prices $40K or $50K above asking. 

You did not mention how far they are from you which is also a factor.

You mentioned that you've been paying water / sewer for all 4 units. 

I'll also mention that one such outfit informed me that insurers use an estimation software which provides standard rates for all phases of construction work.

So in 3 years if you bought a $150,000 house, you would likely have accumulated $12,000 -$20,000 in equity on your $30,000 initial investment - not to mention your tenant paying down your mortgage, plus some really awesome tax advantages (3.3% depreciation, etc.), plus hopefully some cash flow!  

As others have mentioned, the rate will be higher compared to a loan with a 5 year prepayment penalty. 

As to the buddy I mentioned in Washington state it was the same scenario; he converted tax-free up to their standard deduction but above that he kept within the lowest tax bracket and paid the smallest amount of tax possible.Thank you @Basit Siddiqi for calling me out on this and giving me a chance to address my mistake; it's important people have the correct information.  

@V.G Jason @River Sava @Lisa Jones @Ben Pileggi @Gregory Schwartz @Jay HinrichsAnother silver lining I forgot to mention - Good investing partners.Having solid partners who can share the load (financially or logistically) during disasters can make a massive difference.

Also as @Jake Baker mentioned we are seeing BRRRR investors have a lot of success in in Jax area.

I mention all this because it's not a jammed up, slap dash space but from an insurance perspective do you think I should be concerned about the interior inspection and the 2 family zoning but 3 separate tenant discrepancy?