can totally enhance a working relationship. 

I’m a prior realtor, with wholesaler experience and have done some buy and holds in residential properties.

I own a mortgage company now that does both residential and commercial finance, but I spent years as a commercial banker with both big banks (First Union/Wachovia) and 2 community banks.

In your case, changing the property from a rental to your primary residence constitutes a change in use.The depreciation recapture will be calculated based on the fair market value of the building at the time of conversion, not including the land value.Since you're tearing down the existing structure, the entire amount of depreciation taken over the past two years will likely be recaptured, as the building's value at conversion will effectively be zero.The recaptured amount will be taxed as ordinary income, up to a maximum rate of 25% for residential rental property (Section 1250 property).

Prioritize stable cash flow, good location, and manageable property condition, while considering strategies like gradual rent increases, expense reduction, and value-add improvements to enhance returns.

Jeffrey:I'm connected to a large group in Indy that focuses on buy & hold SF and apartment (commercial) residential real estate. 

@Michael Tempel Reventure App has a cap rate at a zip code level based on residential.

Additionally, depreciation deductions on the multifamily property could offset a portion of your rental income, further enhancing returns.Key considerations:- Financing the multifamily: Would you go all-cash or use financing?

Quote from @Joseph Sakic: I am a young investor (23) and currently have 4 single family residential rental properties around the Kansas City area.

Purchase price: $2,800,000 Cash invested: $560,000 The property is a three-story multi-family residential building with six independent units, initially facing significant challenges due to poor conditions.Renovation Investment Summary:- **Structural Repairs:** $250,000- **Kitchen Modernization:** $100,000- **Bathroom Updates:** $50,000- **Exterior Improvements:** $100,000- **Holding Costs:** $50,000- **Property Taxes:** $30,000- **Insurance Costs:** $10,000- **Management Services:** $10,000