Tax deductions for the business portion will work almost exactly the same as if it was a separate building.The exact way rental property taxes work is impossible to describe in one post.

The numbers worked, the location was strong, and it was exactly the kind of opportunity I was looking for.

Any heuristics or “deal breakers” that have stood the test of time for you — regardless of macro conditions?

They are whats keeping the city in its current poor condition if you ask me.

@Bill B. is exactly right.

It can sell and homes do sell, but has to be at the right price for the condition and access.If you want the brutal truth here on BP, post the address. 

This is the Sacramento appreciation for this century (pretty good, but not special for CA) https://www.neighborhoodscout.com/ca/sacramento/real-estate2) property tax has gone up at most 2% a year.3) rents have increased $951.00 this century which is the average rent increase for this century for Sacramento.My market meets all  3 of these conditions, but it would not be a good choice for the OP.Sacramento is a fine RE market.  

.- Conventional financing, aiming for something in good condition (or turnkey) so I can start renting quickly without heavy renovation.- My goal is to keep monthly cash flow in the positive while building equity over time.What I’d like to hear from locals:- Which suburbs have been performing well for rentals and attracting steady tenants? 

Do not assume stable income from Section 8 tenants when the economy is uncertain.Property condition and fit.

If it’s break-even but you’re building equity, appreciation, and tax benefits while living in it, that’s not a bad starter play.Since the house already fits your family’s needs and only needs light sweat equity, one option is exactly what you mentioned: buy it, live there for 2 years (which gives you some tax perks on resale if you decide to sell), and then evaluate.