There are a shocking number of people chasing even marginal deals.You asked about how I would know it wasn't permitted. 

If that amount is less than 100% of your initial purchase price plus rehab cost then you maybe didn’t have enough margin in the deal or didn’t make efficient rehab investments, because now you will have to put more into your working capital to do the same process again.

People need to quit making choices based on fear and instead get informed knowledge that clarifies their questions to make a decision on whether  a certain type of investment is right for them.Nina I think you should stay away from the cheap and dumpy houses in marginal areas.

If you think it's still at the $50-80 profit margin then why would the investor offer you the $50 profit assuming at best he would maybe make another $30.. 

I would add some additional marginal value for him selling the units furnished (which helps me with the AirBNB budget).

I have about a 18k profit margin.

In that case the depreciation would be a wash unless your marginal tax rate is over 25% and then you'd actually get more tax benefit from the depreciation adjustment than what you lose on recapture since it's capped at 25%. 

I want to make sure that the rents support any leverage I use and that there is a comfortable margin of safety. 

We've analyzed a few that look to have thin margins, walked one overpriced one that needed far too much work. 

This is why you need to build in adequate margin of safety by being conservative and always assuming the worst.