What if there are already damages to the property that you could have deducted and tenant keeps whole thing rather than submitting to new management? 

One benefit you may want to take advantage of with the 401k is the tax deduction. 

I am pursuing my goal to be a land investor, and so far I feel good about having bought a number of lots at a good price. There is still a lot I have to learn, so my question is going to be as basic as it gets.  I nee...

So, you don't necessarily have to complete the separation of units by January 1st to start deducting expenses.Facts are important but overall, think of the place in date as the date you can start to deduct some of these expenses. 

At 100k the deduction starts to phase out and is fully phased out at 150k.

Deduct NEW property taxes after you buyDeduct home insurance costsDeduct maintenance percentage, typically 10%Deduct vacancy+tenant nonperformance percentage(we recommend 5% for Class A, 10% Class B, 20% Class C, good luck with Class D)Deduct whatever dollar/percentage of cashflow you wantNow, what you have left over is the amount for debt service.Enter it into a mortgage calculator, with current interest rate for an investment property, to determine your maximum mortgage amount.Divide the mortgage amount by either 75% or 80%, depending on the required down payment percentage - this is your tentative price to offer.If the property needs repairs, you'll want to deduct 110%-120% of the estimated repairs from this amount.Be sure to also research the ARV and make sure it's 10-20% higher than your tentative purchase price.As long as the ARV checks out, this is the purchase price to offer.It is probably significantly below the asking price.

How are you going to deduct mortgage interest, depreciation, property taxes, insurance, etc on the cottage tied to your primary home - without getting flagged for an IRS audit?

This designation allows them to treat rental real estate losses as non-passive, meaning they can deduct losses against other active income.

For example, for rental properties, lots of the categorization depends on the REI's specific tax strategy regarding what we're capitalizing versus what we're immediately deducting.

If you can invest at a higher return than your interest rate, I'd refrain from paying it off so you can continue to reap the tax benefits of deducting mortgage interest from taxable your rental income.