Even a typical water heat replacement would set you back signficantly.There's plenty to the puzzle that i am unaware of but with what you've outlined here i would consider passing on the property.you know you need managementyou know you need to remove at least one tenantyou know cashflow is meager after considering management.i personally wouldn't recommend a client take on the risk for such a paltry pay out out of state.Even when considering long term appreciation the average amount of headache one assumes with a property will bog you down before the long term play pays off.

Like with anywhere else: location, pricing and the overall house you intend to build will play a factor in your profits.

Their goals and upcoming upcoming purchases may come into play. 

@Catherine Curtsinger To play a little devil’s advocate I have been house hacking for 30 years.

So, you're not "wrong" in thinking it's complicated.The tax code plays heavily into how certain transactions are categorized and there is some flexibility regarding what we can capitalize versus deduct.

Preference is cash-flow, but open to appreciation/equity plays as well. 

Each city’s approach can play a unique role, but zoning for higher density developments stands out as a powerful strategy, albeit a tough one to get passed.

LLC's are welcomed, no DTIs, and less paperwork...happy to connect.Also check out this BP article that explains how DSCRs play into BRRRRs: https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

My LLC did not come into play at all.

Strategically positioned behind two other investment properties, it plays a central role in transforming the area into a thriving residential community.