If the building is not stabilized there is a reason why and a reason why taxes are not being paid

( also what would be a reasonable amount to start off with the negotiating to offer on that amount of debt?)

Here are my numbers as it sits:Income:$2600Expenses:$650 - (vacancy, repairs, cap ex, management)$250- taxes and insurance$180- owner paid utilities$300 - my cash flowTOTAL: $1380Left to pay monthly mortgage: $1220So given these numbers I can still get this thing to cash flow, and if for some magical reason I could ever get the city to change the rental license back to save the integrity of the property, this would be a home run! 

Do I need to get a real estate attorney for any reason or can I do the work myself (or with the help of my wife)?  

Reason being, whenever there is a major storm, roof and siding people get backed up for weeks to months.

The reason your individual tax situation matters is likely because this is a loss that is not deductible to you as a passive loss. 

The reason I ask is because your payment on those loans may affect your debt to income (DTI) so by converting a 15 year fixed into a 30 year fixed even with a higher rate you could achieve a lower monthly payment and by doing so you quite actually qualify for more.

Can I deny them for this reason even though they said non-smoking? 

The reasoning for this is that I can have multiple rented out instead of just one higher priced rental.

I can't see the reason to go else where to make 1% or 2% greater return.. you would eat that up in travel costs alone.But anyway.. in my mind we are getting to a balance market.. and your correct rents are not keeping up with costs.. so will be interesting to see how it all shakes out in the years to come.I remember when I started in the business if you put 20% down or 25% down and the tenant just paid off your house  forget about cash flow that was a huge win..and why not.. its a forced savings safe investment tax benefits.. etc.. then it became you have to make money on your down payment this is what created that run..Maybe we will step back in time and break even will be great..