Take the average life of each and divide by the cost and you should be subtracting that from your net income every month (i.e. roof cost / useful life = reserves for roof, $7000 / 20 yrs = $350/yr for roof reserves).

It's really easy to add/subtract bedrooms and garages once you've determined your price per sqft.Here is a really good article on BP about making adjustments: http://www.biggerpockets.com/renewsblog/2013/09/08/determine-value-property-adjusting-values-comps/.

@Ryan Hobbs Check out Rick Harmon's website http://RicktheprobateGuy.com And yes you will have to use the Probate Purchase Agreement and also attach your own Offer to Purchase Property if you already have one.My own personal experience in probate I answered your question on another post of yours..After you scan "Notice of Petition to Administer Estate" from your local adjudicated paper, your starting form is Petition for Probate (DE111) Order for Probate (DE-140) and Letters Testamentary and/or Of Administration (DE-150)...Heir's know how to add - They don't know how to subtract - Rick HarmonMark (N-CA) Sac/Placer county

Unless your friend has the money to pay back the lender the full amount owed after whatever the buyer is willing to pay, there's no deal.Here's the math for illustration (I have no idea what the actual numbers are):  She owes ~60k, the house is worth ~42k, if you subtract ~20k in repairs, now you are down to ~22k of value before you even consider any other costs or possible profit for an investor!

I ran comps against all listings I could find in the subdivision for the last 6 months and subtracted 20% to come up with the ARV...I thought this was being pretty conservative.

My question is this: "If I don't use those funds in a particular year, can I subtract them from my taxable income or do they need to be taxed as such?"

At least, that is how I count it.Once you multiply the ARV by the 70% you subtract the cost of rehab.

What we do is look at your "net rental income" as being either positive, negative, or break-even.We calculate this by taking your Schedule E income/loss, adding back depreciation, and then also accounting for the principal portion of your mortgage payment (if you purchased the property this calendar year and is not yet reflected on tax returns we take the gross rent minus a 25% vacancy allowance and then subtract PITI).If your NRI is positive, it counts as income (completely offsets the debt).

@Nadiya Lonkevych  subtracting your net negative cash flow from the taxable income would result in subtracting a bunch of things twice and would result in deducting some non-deductible items. 

Subtract 8-10% commission, escrow and title, perhaps buyers FHA points, then $91k loan and there is no equity for seller.