If its a total gut, that changes things...but if it's bought right...Rehabbing will likely be your best bet. new builds set the price premium in every zip code I've ever studied. in addition new builds don't take 9 months. we just built a house in 60 days. we wait till permits are approved and shovel ready, investors buy land cash, entitle, contracts, negotiate with financing, place financing when we are ready and break ground. but we build the same over and over and don't go outside our Floorplans  

Sorry if I'm a little cynical, but by all means good sir call my bluff and prove me wrong, I'll be the first to eat my words if that's real.

We're far from perfect, but we cringe at how some of our local competitors operate and have a mission to prove how we take our responsibilities seriously.May we make a suggestion to save yourself time?

You can still do a cost segregation study (assuming timing isn't an issue), but the cost of the study may prove to be more costly in the long run for you than just taking regular depreciation on the property.

I would bet good money that they are paying below market rates.In case you missed it: get rid of them.Spruce the property up, study the market to determine a fair market rate, and find a renter that is willing to pay the market rate, pay the deposit, and abide by your agreement.Not everyone is cut out to be a good landlord.

Study the market.

Study the market.

Then, do an Engineering Based Cost Segregation study and get back some of that invested money back from the IRS (it's 100% free to see how much you could save).

You will have to study the market to figure that out.

Getting the REPS status in order to truly leverage the benefits real estate paper losses offsetting your W2 earnings is something that takes very clear logging of approved activities proving your qualification every year.