We are a few friends with special needs kids, who want to book and buy houses adjacent to each other.

I recently purchased a primary home in LA County Sept 2023 (only put 5% to do renovations and have an interest rate of 7.25%; I rent out back unit when we are out of town and intend to rent out main house eventually).

He wants me to call him tomorrow to set up an appointment to see the house.

If you'll be living in the house and renting it from your parents that is fine for a 1031 replacement (make sure it's an arms length transaction of course). 

Say I pay cash for a house or put down 30k?

The plan is to renovate it and create affordable housing, possibly section 8 only.

If you're new to the investment strategy of house hacking, read "The House Hacking Strategy" by Craig Curelop.

My friend has seen and had horror stories - it's the same in any affordable housing market.  

Once the 5 years runs out you'll have used up your existing available depreciation but you still get to write off other expenses such as maintenance, property management, legal fees, etc.

Not sure how Las Vegas operates but when I get a code violation of any sort I get certified mail delivered to my personal house and multiple other regular mail attempts.