@Neil Da SilvaOnce you have settled the matter of potential mortgage fraud, it becomes strictly a mathematical question ;-)With a 5% downpayment you will be paying an insurance rate premium of 4.00% of the loan value (it will be added to the principal of your mortgage, so you will pay interest on top of it).If your rate of return is better with the 5% down payment than a 20% down payment, then it's the right move.  

Mostly anything you do before the service date will be added to the cost basis of the property and depreciated over 27.5.

I have the GC starting work Monday in which we will be adding a utility room, a hallway to fix a pass-through bedroom and make it a true 3/2, gut the kitchen, and master bath, and basic cosmetics.

Even if you have that, low down FHA loans require PMI (and I think taxes) to be added to the mortgage payments, which really adds up a lot on that expensive of a property.

He mentioned that it's ill advised to add another layer to a roof; you could be adding weight onto a roof that can't handle it.

some of the expenses might be added to the basis of the property and recovered via depreciation.

@Robert Feldman @Rob HoronIf you are not currently in business, the inspection and appraisal cost of a failed deal would sit on your books until you begin business (acquire and place a rental in service), at which point it will be added to the property's basis.If you are currently in business, you will get differences of opinions from different tax professionals on how to handle these costs.

Remember that the 3000.00 should be added to the asset and then depreciated over 7 years. 

Run a bead of silicone around the joints to keep it from getting to the unfinished wood.

Your financing partner should be adding value to you and your business through quality structuring and not just through its interest rate offer.