My last eviction, including lost rents, repair and lawyer fees ran me close to 7500 so this worked out well.

Would we want to include her in the legal entity we create to handle this transaction or no - for estate planning/getting assets out of her name? 

The financing is $59,000 for 20 years, the escrowed payments are $660, that includes PITI.

Deal seems to cash flow less and less the more I look into it.Rents(under market due to older but decent kitchens and bathrooms): $4,250 total.Mortgage payments including insurance and taxes (earthquake insurance): $2,800 a month.Reserves $800 a month.Water/sewer/garbage: $500 a month proforma...Law mowing: $200 a month.

Advertise well (don't be cheap, pay for top ad on Kijiji at least), do a comprehensive screening process, include a credit check (not a free one, pay for it) and ensure you're only renting to people who look really good on paper.

My monthly mortgage payment is around $1500 (15 year loan at 3.375%) including tax and insurance. 

I'm not trying to talk you out of it, but I want to be honest.Most of the markets throughout the country are very high including a lot of areas in Texas, Ohio and Florida (not sure about Louisiana).

For example (and just picking arbitrary numbers here), let's say:Current living expense: $1,800/monthHouse to hack mortgage: $2,000/monthRental income from house hack: $1,600/monthExpenses (including $400 leftover on mortgage): $800/monthIn this example, I'd be losing $800 out-of-pocket per month, but I'd be able to save an additional $1,000 from my day job over my current situation that I could use toward a second property.

I draw the line when the house needs everything replaced INCLUDING new electrical...if the drywall has been ripped out to get 14ga romex then it's time to walk away and let it get torn down.Throw me a PM or a call/text, happy to take a look at it and let you know what you are dealing with Stephen!

Also, did you include a home-inspection contingency with the offer?