For the tenants that will occupy the empty unit in the not too distant future I can make my own rental agreement, in particular, I plan to let them pay for the water as well, and I will set a reasonable security deposit.But for the tenants in the currently occupied unit:1) Would it be possible to write an addendum to the existing rental agreement to require the tenants to pay for their portion of the water bill?

But we don't with anything else (although we've talked about the possibility of doing it and may try it in the future).

While I don’t need the funds immediately, selling would allow reinvestment in hard money loans at 10% or a similar real estate deal.My main concern is tenant turnover, potential repairs, and the costs associated with re-leasing making my return even less. 

Although this is a "tenant will pay for it" - this time, this sets the precedent for other changes that they may want in the future.

Hello BP folks... just wondering if you happen to know of any RE meet ups in the Bay Area.

Good point re Lackland and more turnover.

Another option is a revised Tenant-in-Common agreement, outlining property management, expense sharing, and a potential buy-out provision in the future under specific conditions.

This is where you report negative income amounts, including NOLs.Calculate the NOL Deduction: The NOL deduction allows you to carry the loss forward to future tax years to offset taxable income.

In addition to what Michael said-if you do go ahead with purchasing it, write in the offer that they can not rent out the vacant half, deposit from the occupied side is transferred to you at closing along with prorated rent and get a copy of the lease that has been verified.

Gives me more flexibility on my exit strategy in the future.