Second, real estate investments generate a return in one of two ways - Cash flow and appreciation.If cash-flow is negative, is the appreciation making up for it?

Secondly, how do you finance these units? 

What about the second and third year when you no longer have the labor-intensive initial setup?

Our close family friends inherited the father's house, but it needs significant renovations.

The first is that there's no consensus between tax professionals, and the second is that you will not like my personal interpretation.My interpretation is:Until the property is "placed in service" - everything goes into basis.Illustration.You buy a property July 1st.You finish rehab November 1st and put the property on the market.Your tenant moves in January 15th.The property was placed in service November 1st, and it does not matter that the tenant did not move in until the next year.Everything paid between July 1st and November 1st, including interest and utilities, goes into basis.

Second, you will never know unless you do a 'Cost Plus' type of project.

Key Bank, FLorida flexible lender, HELOCs on second homes and rental properties. 90% LTV on primary.

I work with a lot of people like yourself who are investing in the Tampa area.What @Patricia Andriolo-Bull said is important, you need to figure out if this is a second home or an investment. 

Which may also be a reason to hold on to your current place (appreciation).Second, have you been in your primary at least two years.

I still have that house and it rents for a grand these days. my first house was late 70s that I bought  in those days it was 80 10 and 10  you need 10% cash and normally a private HML would give you the 10% second and bank was the first.. interest on the first was 9% second was 15%.. this was before the Carter interest rate run up.. paid 80k for it in Milpitas CA.. and it was brand new bought it from Shapel .