If it’s too expensive to separate out the heating costs with the furnace see if you can shut off the second unit and install a separate heating system.

An investment interest expense is accrued when money is borrowed to fund an investment.

While they do deliver results, they are expensive. 

I've heard the LA market can be very tough from a rules and regs perspective, some great resources here for "long distance real estate investing" that may be helpful if you are looking to get started in a lower cost more stable market for long-term holds

If the property doesn't appraise that high, you will have to lower your loan amount and won't be able to get back all of the cash that you invested. 

Is the pre-payment penalty worth the lower rate you'd get.

We have seen price run-ups, bidding wars, rent increases like the rest of the country but at the end of the day our entry price point is still much lower. 

I've build a lot of equity in one of my properties and I am thinking about recasting to lower my monthly payment. 

Can you give us idea of gross expenses and income?

Also curious if I can increase the sell price in exchange for them to get a lower interest rate?