Honestly, it's too bad that the operating part of your dad's business does not carry with it some residual value of some sort with regards to that commanding a sale price.My hunch would be that this would be far too risky to embark on as a first go of things.Especially, from what you're mentioning this may have a large impact on the quality of your dad's retirement.If you have the funds and can structure something, the place to start would be to engage with an A/E firm to get a cost estimate generated for a concept building like you're mentioning. 

I'm thinking that a want to mainly focus on multifamily after I get rolling because of the residual income but obviously I have a lot to learn before I get to that stage. 

For the existing system:  If there is any residual value of the existing system (which it doesn't sound like there is), I believe you can deduct that residual value the year when the system was removed.  

Typically the residual land value won't allow it.

Love the idea of residual income! 

@Damien L. if you don't want to create a new business entity yet then you can appropriately track your income and expenses and then use Schedule E on your regular 1040 tax form.FROM IRS.GOV WEBSITE:Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

The plan is to start moving towards multi family very soon to build that residual income.

I start off by asking the seller what they want from the transaction (lumps sum, residual etc.).

I think I am mostly interested in buy and hold rental properties this creating a long term residual income.

I think I am mostly interested in buy and hold rental properties this creating a long term residual income.