As far as I'm aware, I have to pay regular  income tax on the $ 500k.

Listening to that podcast regularly will give you a great grasp of what multi family investors around the country are experiencing. 

I assume you have a security deposit?

Yeah that makes sense on a larger property there are economies of scale so hiring security cost per unit wouldn't be as expensive. 

Is there a security deposit? 

There is a REIG group here that meets regularly.

We do have a secured solid wrought iron fence/gate to the alley, so the tenants are secure as long as they remember to lock the gate.I will go ahead and try to contact our council member and see if anything sticks there.

Your friend should send a demand letter for the return of his security deposit, or whatever portion of it he feels should be returned.

Thanks to them, I am able to put a $65k offer on what would normally be a $250k home (my market is still a buyer's market so homes normally sit 75+ days on the market) and there's only a handful of investors in my area so I don't really have that much competition since regular people won't touch it.

We do have simplisafe which might have failed to ring.My idea is to have a security guard who can be present at the property while no one is working there.