Many investors are scared to get into California -- and perhaps rightfully so, because I am now forced to attend a hearing this Wednesday at the Capitol to lobby against an ADDITIONAL 15% hospitality tax which is being proposed here in CA statewide. 

I'm just not sure, based on what you've said so far, what you are proposing to them and what they are willing to accept.Also, since it's a multi, you want to have the roof, heating, cooling, plumbing, electrical and sewer all inspected along with each bathroom and kitchen and the foundation.And you want to get a trailing 12 rent roll and a copy of all lease and rental agreements and have language to deal with renter's deposits, among a few things to do. 

Any ideas on what I can propose if they don't want to lose it and I can start covering the monthly payment? 

To do this, you need to take ownership and responsibility for your work, look for ways to add value or contribute beyond your assigned tasks, identify problems and propose solutions.

One being using a drywall sander on the ceiling and the other is to level all of it with drywall mud with trowels and to make it smooth.

The BLM is also proposing Goldfield recreation area to get rid of the homeless encampments. 

What would you propose the legal theory would be on this?

Giving me an actual cash flow of $35,697/12 = $2975/mo minus whatever I pay the lender monthly (proposed 18% interest per year would be $2850), so only a very small margin left of $125.

Losing the interest on the payment is something...Maybe offer them the option of rolling the loan into the next property you buy, giving them an option to refinance an aggregate first for you (well - maybe not if they are weird), or offering them a variation on the "cash for keys" kind of thing....maybe proposing something like, "we are sorry you are losing some income, you can get paid off eventually through escrow on the refinance, or we could pay you off now with an extra small fee for your inconvenience and loss of income from the prior owners' actions "....maybe something like an hour or two worth of legal fees.

My uncle came to me with a proposal to do wholesaling deals.