Also from the investor's standpoint I think it leaves a lot of opportunity on the table.

I’m interested in 2-4 MF with a value add opportunity in C-/B areas owned by mom and pops in artsy LA areas 

I'd suggest running the numbers as a stand alone opportunity - find that price & offer accordingly.

Chris:Based upon your post above, I personally would pass on this "opportunity".The owner already has {potentially} $36,000.00 worth of other leans on the house - not counting the tax arrears.  

I live by 121 and Denton Tap and looking for properties within a 25 mile radius but will consider much further based on opportunity.

This positive experience has turned me onto real estate and other related opportunities.

If his rent is only half of yours, there are tenants that will see that as an opportunity to "get over".

May have an opportunity to decrease insurance costs - is that a hard number you've been quoted or estimate?

You might discover there is no good reason for a wide range of value and when you find that, you have discovered opportunity - your welcome.

The margins for error seem slim on that, and you are essentially buying it for more than that.If opportunity is going to come to you at an inconvenient time for you, then it better be worth it.