This will also make your cost cheaper to build-out since retail build-out is very expensive and not re-usable when the tenant leaves or worse (goes belly up).

When I pay off my now rental property mortgage, that property will begin to show more taxable "profit".

I have no experience, but I may be able to get a private loan for enough to start something in this market despite my lack of experience (I will have to show good numbers for this to happen).What do people think: if the numbers make sense for a property, is it ok for a new investor to start out in an expensive market (average sfr is like 500k here), or should I start in cheaper markets?

I wonder if the rate would have been cheaper.

. $450 now is cheaper than court costs and another mortgage payment with rent coming in.

How much of a taxable loss could I create on a slightly positive cash flow property?

I will simply compare the cost of repair/vs demo to see which one is cheaper and go with it.

So if you do the conversion prior to Dec. 31st you will have to declare the conversion amount as your taxable income in the year 2014.

You have $10,000 in deductions from your rents of $12,000 giving you taxable income of $2000.  

Single family home are usually cheaper, and easier to sell if you ever decide to flip.