But if your neighborhood has lots of garage conversions, then that would lead me to believe you don't need that garage and that it's normal practice to convert the garage.  

Funny thing is, the same question posed on stock market forums in inverse form would elicit a strong response where people would not touch real estate with a ten foot pole. 

I am claiming that these were normal wear and tear and potentially from tenants before- which would not have been detected during move in.

I have read other posts but they all seem to be 1-3+ years old and I know things change, is this something that is normal or should I walk away.

You normally give great advice, but I need to disagree with you on not reporting rental income.

I’m looking to house hack with an FHA loan to decrease my living expenses and get my foot in the door with real estate investing.

Treat it like normal.

Transfer taxes / stamp taxes are normally added to the cost basis of building / land.

Don't look at price per square foot, first off totally different markets and I'll assume different square foot of homes, the smaller the home, the higher the PPSF.

The tenants that you get, offset what you would normally pay, so it's a great set-up with less risk than having 2 mortgages to pay for if you lived in a home and rented out a 2nd home when you start this REI journey.In Gilroy, you will get appreciation, and you should be able to rent out rooms at a good price point.