I know my profile is pretty sparse right now and I'm rather time poor at the moment, but I'll be adding to it as I get the chance.

I think some areas may have more homes that are in need of updating, but it's not the same as trying to find a rental that works since home prices and rents don't increase proportionally. 

In 2018 Santee saw an increase into the $520-575k range for 3/2's, giving numbers that better supported doing a master suite addition. 

The downfalls to SFH are that it is harder to scale your business as you grow, there is more work in property management, which increases your costs, and the loans get harder to get as you grow. 

UNLESS you think there is still chance for some strong upward movement in value..

Entities are mainly used for asset protection.However, some would argue that by structuring you will lower your chances of having an audit of your taxes due to the lower ratio of audit for entities compared to claiming it directly in your 1040.If you are using a multi members LLC taxed as a partnership, this LLC will only file an informational tax return (1065) and each member will pay the taxes on their own tax return, based on the K1 that the LLC provided them.

This not only effectively increases your hot water supply, but makes it safer.

They were both ARMs that increased to 11%, and he couldn't afford payments.

I wonder if the thought is that by replacing those tenants, my maintenance and repair expenses drop, thus increasing the NOI and value.

If her portion of the rent will increase you may be at risk.