I truly appreciate you sharing your thought process and the property specifics – it's clear you've put in a ton of work and have a deep understanding of the contracting side.

If you re interested in buying, just get another appraisal.The owner may have asked the appraiser to make some assumptions that drove value higher, and if a bank had ordered the appraisal, they would have gotten a different answer.If a non-biased appraisal is truly 5-10% lower, you can counter at that price.  

@Kyle Vogeler how many units in the property?

Yes your Duplex is an income producing property.

The IRS only knows what tax return reports the activity of the property. 

I am a CA RE Broker and had been a broker of record for a couple of property management companies in southern California.

-------------Hemal,I afforded you the same courtesy that I afford every owner who posts an issue or a complaint, and I waited to respond until you had an opportunity to speak with me.

Quote from @Jaycee Greene: Hey @Garret Rumbea What about something like a 28-unit property at 123 N Inez St, Hemet, CA 92543? 

Can it just be recorded as an owner contribution?

Hi,I am looking to house hack a multifamily property, I am handy I prefer to have some else to take care of resident needs.