This is pretty clean.Scenario 2:  Your partner has owned the house for 15 years and has been taking accelerated depreciation, so the book value of the house is very low. 

The city also benefits from a relatively low cost of living compared to other major cities, attracting both renters and investors.

Since competition is high and inventory is low on Long Island, I recommend BP members try to go direct to seller which is an active form of building an off-market deal list. 

What are your buy-in costs?  

There is a cost to that and the potential for having to spend more to fix things up.  

To avoid these costs, a common strategy is to set up a land trust to hold the property title.

I certainly know that future years the expenses won't remain that low, but wouldn't that be a reality on a property that has a lot of recent improvements?  

This creates two loan payments ($100,000 of equity and $300,000 on the new mortgage).Key NumbersHome Equity Loan Interest Rate: 6%Mortgage Interest Rate: 7%Rental Income: $3,000 per monthExpenses (management, taxes, insurance, maintenance): $800 per monthIncome and ExpensesMonthly Rental Income: $3,000Monthly Expenses: $800Monthly Mortgage Payment: $2,000ExplanationThe investor earns $3,000 in rent each month.They pay $2,000 on the investment property mortgage and $800 on other expenses.This leaves $200 profit each month or $2,400 per year.However, you have to pay $6,000 interest on the equity borrowed.This leaves you with an annual loss of $3,600.While the rental property generates positive monthly income, the interest cost of borrowing the initial $100,000 results in an overall loss.

I know a cost segregation study would be too expensive for such a small amount of property, but is it permissible for me to estimate the value of the components on my own?

This gives a better snapshot of market trends than averages, which can be skewed by high or low sales.November: $484,995December: $484,500January: $491,995 How long would it take for my home to sell?