Also, as a followup question on why I was confused, I had conceptually always thought  that an expensive California property that may be cash flow neutral pre-tax would be cash flow positive post-tax deductions. 

Just be sure to say builders grade which is not any custon work ..formica counter tops , plain porcelain title , prefab cabinets, laminate floring , neutral colors ... you get the idea .. one why to really increase your profits on rehabs is to have a contractor do the major repairs and you or a handyman tackle the easy stuff .. laminate floors can be quite easy to install if your floors are level and trim is not installed yet .. painting can be done by a handyman ..tile work can be done also ..in some cases and some states these need to be done by a licensed contractor and permits need to be pulled .. it is different by each state .. if i saw that house with those pics, i would think your looking at at least $75-100k in rehab ( taking into consideration of Ca. higher construction costs ) it looks more like $35-50 in rehab here in Fl.

An ocean view is even more of a neutral luxury, adding no real value or comfort to your unit.

Paint color will most likely be some sort of a neutral gray on the walls with white trim and ceilings.

It has been transitioning, but it's still going to be important to make sure there aren't any problem houses immediately adjacent.At that price you should be able to be just above cash neutral, at least for the first 5 years assuming everything was done correctly.What I don't like about that property is the fact that you're paying retail price.

Then if you have any bad stains in the subfloor from pets they make something called Natures Neutralizer you spray it on the spots and let it do it's job.

If there is not enough money left over to make everything nice then try to blend in items to make neutral and less noticeable.

Likewise, if you do an addition and add a nice master suite to a house that doesn't have one but in an area that calls for one, you could easily add more than $1 for each dollar spent.On the other hand, if you replace neutral finishes during your remodel with custom finishes that don't have broad appeal, you could lose money on your rehab (in other words, house could be worth less after you spend money on it).Most likely, for a personal remodel, you'll be somewhere in between.  

I have several rental houses and have always given them a new coat of paint (neutral color) during the initial make-ready.

Basically I am looking for a cash positive or cash neutral investment with 25% down.