The house isn't going anywhere, so handle the IRS and get them out of your life, then move forward with a traditional loan.

If I compare the rental income to the PITI payment it's actually just positive, but with other expenses (water/sewer/trash and capex, calculated by using 8% of rents), it turns into ~$500 month coming out of my pocket.

I have a stone guy if you want to price compare. 

One of the best ways to get started is by using a 203K or rehab loan... this will allow you to get in the property with 3.5% down and you can even finance the rehab.Interest rates are a bit higher than traditional FHA loans but the 3rd "R" stands for REFINANCE so you'll only be holding that loan for a short time.I'd speak to a local lender, broker, and investor for more info.Aside from attending local meet-ups, don't hesitate to reach out to people personally via private message or on forum posts...

From a financing perspective, I guess it is more difficult to borrow from banks against self storage facility to increase leverage, as compared to borrowing against residential rental property. 

Just use comparables like an appraiser would for this type of property.As a beginning wholesaler, you need to focus on discount from fair market value (after repairs). 

(Tech works earning 6 figures+ or is it more of blue collar type)What does living in San Tan or comparable areas feel like (Eg: Does it have good hospitals, parks, schools, well maintained roads etc?

-- Of course I realize that we could make much, much more $ by keeping the propert(ies) and renting them out long term to tenants (and we have other properties that are, and will be rented out the traditional way), but we have a heart for entrepreneurs and RE investors and really want to help some young person be successful who otherwise might not have that opportunity.

Hi Tom, I wouldn't say you are dead in the water, and without seeing your tax returns I can only speculate, but a few notes before you assume that you can't get a traditional mortgage... 

Obviously the convential fannie/freddy loans are the best interest rates and terms but commercial rates aren't terrible....especially when compared to historic rates.