This will be a fixer upper to rent.The question is, is it possible to get approved for a mortgage without having a source of income for the last couple of years?

At one point, I was thinking of the process of purchasing a fixer-upper and ways to add value to it.

the lower level is approx 700 sqft and upper is approx 600. the 700 sqft unit is rented month to month on the lower end of market rents with a tenant who has been there for 12 years.

There's nothing stopping your LLC (upper tier entity) from owning an interest in a new LLC (lower tier entity) if the goal is consolidated financial reporting.However -- that's not your only option. 

Here in AZ, investors are seeing cap rates in the upper 5’s and cash on cash returns in the 7% to 8%...once stabilized !

Unless maybe we did a fixer upper?

You need a very specific fixer-upper without many offers to make FHA 203k work in this market.

The upper portion is significantly rubbing against the frame and removing paint/wood.Breaker/electrical issue.

@Travis Frenchak......my sentiments exactly.... living rent free and knowing you can not evict them, they absolutely are calling the shots and have the upper hand.

Haven't owned the property more than 24 hours and lower unit tenent wants to have their son rent the upper unit, build a shed for hands on work, and a fence for their dogs (2 huskies).