@Bryan HartlenManaging low-end properties can be demanding due to higher tenant turnover, increased maintenance needs, and frequent rent collection issues.

Loss of use is foryour additional expenses if you can not live there due to a covered claim (ie.

I was able to figure out that they had come upon some hard times and were significantly low on cash.

That could come close to covering expenses.

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?

If you can’t do a 1031 to a non-income tax state, figure out a year when you will have lower income and tax rates ar as low as possible.

Risk entails everything from lawsuits to lack of diversity in investments to low rates of return to high exposure to vacancy (more units theoretically lowers vacancy exposure).

Forewarning: This is going to be long and detailed.How this started:When we were young, we would buy a house that was livable, but in need of rehabbing, move into it (which allowed us to get a low interest residential mortgage), then rehab it, using contractors for what we couldn’t do ourselves.

Here’s the bottom line; unless the deal is VERY large, or the sponsor is going to syndicate a large number of deals, the investor will make more money purchasing the property theirselves with a option low to moderate interest rate loan.  

My company has gone through 3 dishwashers in the last 12 months and it has been an added expense.