(Although I don't know what it is like in LA)Even if you are able to increase the rent, that could happen at the expense of higher vacancy rates, further negatively impacting your cashflow in the short term.Based on the asking price of the seller, you will be subsidizing the lifestyle of your tenant.In my opinion, it is not a good deal.

If I were the previous owner (AND it was still within time to file a claim), I would say no because A: it should've been something you brought up before, and B: even if you pay the deductible, the claim still remains on the CLUE report for up to 7 years, increasing their premiums for the new property.

If your credit has improved, you may get better terms than you currently have and, even though you may not pull equity out, you can reduce your monthly payment = increase in month cash flow. 

  - being able to use projected rents when purchasing a multifamily to be able to qualify- ability to convert properties and increase or decrease units@Abel Curiel - you are correct - rates tend to be higher- normally 1/4 to 3/4% higher depending on factors and timing. 

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. 

@Surendra Chawla and @Anand Krish I've owned a couple houses in Queen Creek thru the downturn of '08 and the rents increased because of heavy demand for nice SFR homes in the area. 

What you've got to figure out if if this increased tax bill will be more or less than the higher payment over time on a mortgage at 7% or 9%.- Income from sources that can't be used as mortgage-qualifying income can of course certainly be used as assets for additional down payment.

forced appreciation is an artificial increase in value realized when the property is sold; there are a number of things you can do to improve the property,  new appliances and services for tenants,  obtain an upgraded appraisal, increase rents, upgrade tenants, and coin service laundry machines. 

Most of the big speculative money that is buying at these 3.5-4 caps are waiting for the rents to increase over the next few years. 

(can dwelling be stepped up to $2.9M, increasing depreciation expense to $105k per annum over 27.5 year asset life?)