instead, it is capitalized by an adjustment to basis.If the renovation was done to make a unit of the property ready and available for rent, then the renovation cost is also capitalized, not deducted. 

Hot market, you could adjust up from 70%, slow market adjust down.

(Ultimate Goal)Goals will change and adjust based on circumstance and perhaps it's wishful thinking, but I'd like to start with the end goal -both short and long term- already in mind and formulate the plan to get there.

How do I make adjustments in looking at the comps?

I developed a calculator in excel that adds the rehab cost to the purchase price thus adjusting the cap rate, if the rate isn't where you want it to be lower your offer or don't make one.

No problem and sometimes the adjusted rents can also affect your offer.For example if you know a property is way undervalued you may offer more.So I would really consider both rents when analyzing and determining my offer.

HCAD also has given it a building grade adjustment of C+.  

Hello,When you look at bigger deals financials, what line items do you always adjust?

The appreciation is more or less meaningless because you're not getting rid of the property.These are examples on either end...but figure out your goals and adjust.

I cannot answer as to what the rules/laws are in Denver, but adjusting the rental rate based on number of occupants sounds like a violation of the Fair Housing Act.