Second, for you as a taxpayer you need to evaluate if your tax situation (e.g. property type, tax profile, material participation, etc.) will allow you to leverage additional losses generate from cost seg to optimize your taxes. 

I upgraded the “bones” of the property and the cosmetics.

Focus on tax-saving strategies such as cost segregation studies and bonus depreciation to accelerate deductions.By qualifying as a Real Estate Professional (spending 750+ hours annually and materially participating), you can offset your wife’s S-Corp income with real estate losses, reducing your tax liability.

With labor and material, and not counting the identification and obtaining the addresses of owners and matched to properties, I guess about $2.00 per letter. 

Find out if it's a problem or if it's just cosmetic.  

We have had two homes broken into and materials stolen recently.

It also depends how distressed - knockdown, full gut rehab, cosmetic rehab, lipstick flip.

You are better off finding a solid property that needs light cosmetic work (paint, floors, or maybe even a kitchen or bathroom remodel), buy it at a decent discount and put 25% down or more (this is when you get best rate terms). 

However, note that STR income may be considered active if you materially participate (e.g., managing bookings or tenant interactions), which could subject it to self-employment tax.This post does not create a CPA-Client relationship.

With the fires, labor and materials are going to be in short supply.