@Allen Fletcher is right on in his assessment of the actual tax being dependent on past use (actually 500K tax free is the top exclusion if you're married and have lived in the property for 2 out of the last 5 years) and future strategy (depending on your path you could exempt all or part of the tax in a 1031 exchange).Your accountant paints the current picture better than anyone.

So this property needs some work (cosmetic, paint, updated fixtures, landscape, hip styling) and I can get a loan for it and pay for the rehab expenses out of pocket.

Head out to one, find an investor doing the type of investing that you also want to focus on, and offer to help them for free with whatever they may need (finding deals, marketing, painting their flip, organization, etc) in exchange for their mentorship throughout your first deal.

@Enrique Saucedo, I did a substantial amount of remodeling on all of the units.The first 7 units, in Mountain View had essentially the same level of work: New flooring, new oak kitchen cabinets, new granite counter tops, new appliances, new toilets, new tile, grounding of electrical outlets, sheet rock, paint, new fixtures.

I ran some comps and the price is in the ballpark The house needs some TLC (paint, landscaping, carpet) there are no major problems that I can see. 

I like to go in and just paint, add new appliances, maybe knock down some walls, change the flooring, and boom.

Other renovations included new roof, appliances, AC, flooring, lighting, paint, conversion of 100 amp glass fuse panel to 200 amp thermal CBs and the elimination of gas lines. 

So, I would be lending her money to finish the basement, putting some carpet, and doing some interior painting (about 15k so I'd make about 7,500). 

Well I believe the home will appraise at around 350,000 once I paint it and my loan is 240,000..

, interior paint, appliances, landscape, chimney sweep and roof, with some brick work.