Refinancing could be an option, but I don't want to end up in a position where the increase in P&I payments would negate any Rental NOI.

For everyone interested in understanding the Memphis, TN market conditions I suggest subscribing to the Chandler Reports Below is their report for August:"August Real Estate Update Home Sales Memphis and Shelby County home sales continued to improve through the summer.

Quality of flooring as with everything else...depends on your investment strategy (buy+hold, flip, etc), market, neighborhood, condition of competing rentals, what rental rate you're asking,...For typical rental, if you're buy and hold in a working class neighborhood, as had already been suggested, I use traffic master allure wood look alike laminate flooring.  

It feels like we are paying for the living room to be returned to pristine / new condition which isn't necessarily our responsibility.

Just for reference - we rent fully updated SFs and charge above market rents, so I am not suggesting slumlord conditions.

As far as the number of units it doesn't matter, you can get 4-plex after 4-plex as long as all your VA loans don't add up over $424,000, that it is increased in more expensive areas, over $700k in the Bay Area, Hawaii etc. 

It really depends on the risk vs. reward for you and how much time/money you have on hand.My gut reaction: lawyer up and prepare to sue both the city and land owner for creating hazardous living conditions.

Why not rent it out for one year, then when the lease expires, get the property in mint condition and sell it to a retail buyer? 

With the flood insurance cost, this unit will be neg cash flow unless I increase the equity in the unit which brings it down to less than 5% cash on cash.

My question is: is it possible to raise the rent up to market rates if a new tenant is placed, or does the unit need significant upgrades to justify such an increase?