$10 wasn't worth evicting him over, so we let it slide until we figured he was selling drugs and/or sex out of his apartment.  

This one batch of units is in a decent area but was always owned by a slumlord who had no rules and let the tenants run drugs in it as long as he got his cash.

A good lawyer would make this work out; it doesn't likely sound legal that property owners could deny another owner reasonable use of the property, and I think most courts would agree that utilizing some administrative loop to deny someone utilities would be denying reasonable use of the property.

A lot of the "vacant" homes in the real Bay Area are drug labs with straw owners. 

Like a drug you do not want to take control of your life.

I have a degree in business administration and several years of admin, clerical and customer service experience. 

I understand there may be some more management intervention and some extra administrative duties, but the cash flow seems great.  

This move would be similar to a drug dealer taking a deduction on his taxes for the meth he bought wholesale from his source.Keep in mind per Beth's advice, about 1099ing them,  the reason for 1099's is for the IRS to have a paper trail to follow the money back to the source to see if there are further taxes due to a miss-classified sub-contractor which is what the boys are. 

In many states/jurisdictions, you can purchase the asset during probate administration, prior to distribution and probate closing. 

I've organized data, done design, specifications, purchasing, and construction administration.