In this instance, if one of the roommates leaves, it is the vacancy belongs to the remaining roommates.

Southern CA is highly likely to remain a desirable place to live so it seems like a fairly safe investment.

With upgrades we have planned to the units, that situation will only marginally improve over the next several years.Planned upgrades:New windows - $2500 x 17 = $42,500New HVAC & central air - $3000 x 9 = $27,000Interior upgrades to remaining 9 units - $3000 x 9 = $27,000TOTAL - $96,000This sounds daunting, but over the remaining 4 years of our 5 year plan equates to $24,000/year, or $2,000/mo., which is quite manageable.

Home prices have appreciated a lot, while rents have pretty much remained flat.

The remaining land has trees, a barn and some livestock.

Now I'm seeking larger units but remaining patient for an ideal prpspect!

The idea is to re-finance for a better rate by paying off the two and cash-out remaining equity available (no appraisal done recently).The broker is proposing an agreement of an approximate $700 non-refundable fee to me, and 1% commission of the loan amount (loan amount approx $700K). 

Whatever you decide, remain disciplined!

Now the baggage:The homeowner is telling me that previous people have had issues obtaining financing on it because one person owns seven of the remaining 10 units excluding hers and 2 others. that majority owner apparently has a very negative local reputation.

Jon, glancing on your comments, I'm concerned that you remain unclear about this very complex area of the tax law.