I believe if this vacant building is like most your estimate of rehab is way understated.It's not just the interior of the property but all the exterior components and additional interior upgrades the county or city might require for code compliance.If landlord pays water or other utility with current setup design then go 60% costs annually instead of 50%.

I use the component depreciation method for my rental properties.

A CPA can set it up pretty quick.Your payments received will be 2 components: interest, and principal.The interest is income, not cap gains.The principle received will be 2 components : return of basis, and cap gain.

Given that I think financing is one of the most important components in a CRE transaction a broker is well worth the cost.

At what point is it detrimental to the market?

It depends on the location, the age & condition of the structure and it's components, weather there are liens on the land records, if there has been work performed without the required permits & inspection approvals, are there zoning or health department issues, are there open code enforcement cases where violations have been cited, are there fines running, and if you are will take responsibility for that type of a project.

They tend to make money no matter what the cycle is in that asset class.Maybe you buy something all cash with a value add component to it.

Expect to get a pig with lip stick on it, not replacement of all major components, expect to over pay for it, expect much higher tenant vacancy rates than they quote, expect much higher repairs, replacements, and turnover costs/damages than any projections will show, expect no appreciation.....see a trend?

In my experience with real estate as with many things in life, I have found that clear communication of expectations has proven to be a key component in the successful structuring and execution of any sort of business partnership or service transaction relationship.

This means I'm calling contractors myself for all of the components of a very multi-faceted rehab.