Joe Walsh - Ordinary Average Guy :)

But check out the following BP post:https://www.biggerpockets.com/forums/48/topics/877...Speaking of underlying concepts, the reasoning for excluding CapEx from NOI is because CapEx items are generally infrequent in nature, not in the ordinary "operation" of the properties.

Just cap gains, And tax on depreciation you claimed while owning them at ordinary tax rates (25% max cap).The two year (perhaps soon to be 5) thingy is only for your primary residence.

Ordinary income tax rate turns into long-term capital gain rate on day 366.  

The average person will lose close to 40% of the value right off the bat with ordinary income taxes and penalties.  

Once you set up an LLC, start advertising the unit then start doing rehab work, it will all become ordinary and necessary expense write off on your taxes.

HOA rules and ordinary leases often require residential use, and the HOA had a weak argument in stating that renting a place to stay for a short time is not a residential use.Many HOAs have deed restrictions that say homes may not be rented for terms shorter than a minimum, such as 30 days or six months.

So the total ROI considering both the invested and uninvested cash is only 27%.All that money is taxable at your ordinary rates.

Also, you have to take into account that you won't be able to take deductions of the rental portion of the property towards your ordinary income.

@Andrew Taylor, just to expand on what @Brit Fosheesaid, get both type of comps.