Not having them can create issues when selling later.Over-improving for the Neighborhood – Be mindful of your area’s home values so you don’t invest more than you can recoup.Ignoring Structural & Mechanical Issues – While cosmetic updates are fun, addressing foundation, plumbing, electrical, and HVAC systems first will save headaches down the road.For the best return on investment, focus on:Kitchen & Bathrooms – These are the biggest value-adds for a home.

It'll be fun to grab coffee and meet up! 

Also your permitting process, type or land, grade of land, if underpinning is required will all play a factor into your cost. 

Play dumb, ask questions, and try to gain as much info as possible before choosing a contractor. 

@Eric E.UBIT only comes into play in an IRA on leveraged real estate and running an active business.

Oh and it's even more fun when you get a surprise package in the mail with fun stuff and apparel! 

It's unclear on how that plays into your question about taxes.

They loved it because they got some play money right away and steady income each month without having to deal with toilets and tenants.

Well I have seen this come into play - I had someone who has a note in florida that was a non-owner occupied loan and the lender claims the borrower failed to make payments on this and attempted to record the deed in lieu.

If you play your cards right, this could be a great way to build equity and add value to the property.