So the value will come from the CAP rate or comparable sales that recently occurred. 

Best course is to have all the appropriate paperwork prepared and ready to send to tenants and vendors as soon as settlement occurs. 

If you let the tenant know that you will handle the matter fairly and honestly, they will have nothing to fear.For the future.... it's best to do periodic inspections during the tenancy and to charge for damages as they occur or as you discover them.

Can a property improvement under $2500 be written off in the year it occurs, even if the expense happens before a renter is put into the property?

Jeff Oberts and don’t forget to send your guests and make them sign the rental agreement (easier done on vrbo than AirBnB) that says “if you break your finger it’s not my problem” so these situations never occur.

Don't get me wrong, many people make a TON of money doing this but tying up your investment is exactly what would occur. 

Would this protect my private home should a law suit occur within the in law suite?  

I set up a really simple wordpress website for myself that show the properties that I have, but then if someone wants to book, it directs them to Airbnb.

@Karen Emery So far I've made 2 cheap wordpress websites for buyers and sellers and just done free postings on craigslist and FB groups, and some cold calling from driving for dollars.

The seller and I were unable to come to an agreement when we became fully aware of how recent the restructuring occurred and the lack of proven operation compared to the price.