The tenant will pay you first months rent and it will be subtracted from that. 

@Jeremiah Ratzschsorry for the mess up mate; please re-evaluate the numbers based on the actual calculation method of subtracting the % CAPEX/Repairs/Vacancies/PM from the final amount of Rent - Fees. 

@Costin I.You're correct that refi is not a taxable event.You're incorrect that mortgages are subtracted when calculating taxable gain at sale.

You can pay for the material directly --pay the supplier for the material, then subtract it from the contract as you go through that part of the build. 

Then subtract out the $150,000 that would be paid off...so your mother-in-law would receive a check in the amount of $90,000 or so (since there will be closing costs). 

I'm starting to do property analysis and have been wondering when you do analysis on a house hack project, do you subtract the rent that you would be getting from the unit you will live in from the monthly income of the property or do you still include that knowing that you will get that rent as income when you move out?

If you are looking to renovate, make sure that the comps you are using are also renovated to a similar level as what you plan to do.I do a side-by-side comparison of every floor plan at the subject property to each of the comps, comparing beds/baths and square footage of the units and form an opinion of potential rents on every floor plan.Next, I add up all of the rents for the year for all floor plans, and then subtract the current total rents for all floor plans. 

Government says you can't claim the land value as an expense, so you subtract $20K.

What exactly am I adding and subtracting if you don't mind? 

Usually I find the price by taking 75% of the ARV and subtracting the expenses.