But there is a pattern I've observed:  Go to a "free" seminar, get pumped with the idea of no money down REIGo home and start wholesaling Don't find a deal in a year Abandon the REI dream I say to people all the time if you have some money $25k or more [and you do Maria it's in your home as equity], then buy something just skip the wholesale step unless you are like super young with a ton of energy to dissipate on chasing sellers and investor "buyers". 

Can you explain it - sure but the IRS has a pattern of saying "I don't care".the best way to do this would be to rehab out of pocket. 

My personal experience too and this is for those that do not plan on owning them forever and willing them to your kids or next of kin at a stepped up basis.but for those like me that were thinking hey I will own these 7 to 10 years take the write offs then sell retail..I did all that sold retail but what I was not thinking about is that a 10 to 14 year old home even though I bought them brand new.. to sell retail   what was acceptable when I bought them  tile counter tops  black appliances etc etcnow retail buyers standard is granite stainless  new paint 3 colors floors perfect etc etc.so it was costing me 20 to 25k per home to do a retail up grade to sell them for retail prices.. along with cap ex ( which in my case was minimal) since these were only 10 to 14 years old.. but then roofs being replaced because of hail that cost deductible.. and so on and so forth.. the cost of owning and keeping these nice is just more than you can raise rents in most markets.. that's my experience I got top rents in the day but they never went up much during the 10 to 14 years of  ownership.. just like I see modest type rentals that rent for 700 to 900 those rents have stayed pretty constant for the last 20 years .. and prices to fix stuff has gone way up.. 

Wood paneling everywhere, pink 4x4 tile in the bathrooms, orange and green countertops, you get the picture.

You can also read the fine print on the back of a bundle of shingles and it will spell everything out.Roofing, like laying tile or painting can be mind numbingly BORING, at least as far as the FIELD WORK goes.

If there is a pattern of water damage losses it may indicate a problem with the plumbing work that was done when it was built.  

Same goes for the tile.

New mechanicals, new roofs, tile in all bathrooms/kitchens, granite counter tops, hardwood floors, huge walk-in closets, laundry rooms, open floor plans, new siding, new windows, spray foam insulation.

It can be found in insulation, ceiling popcorn, tiles, lungs, and more.

If you do a high end finish (i.e. granite counters, tile showers/tub surrounds, hard wood flooring etc) you can pay more that that.