Thanks for the response as well Paul, my concerns are not necessarily around depreciation (I’m pretty sure that buildings are depreciated over 27.5 years opposed to 20 years) or other deductions that are typical to long term rentals but rather tax guidance that dictates what is a schedule E rental portfolio vs. a schedule C business similar to hotels.  

While there certainly reasons a person may need a place quickly, logic dictates those looking to move in 30 days are more likely to be good prospects.

Then we had to replace areas of framing on interior and rebuild the window framing plus repair the aged window, but you might need to consider new window as well based on how many on that wall. then drywall and any other infrastructure that needs to be done on that wall: electric plumbing, etc. that affected wall had plumbing so new code dictated double wall with insulation on outer most wall which added additional cost. termite damage went as high as the roof truss and I needed to replace a beam, but luckily above the bottom beam was the only affected area.

@Nina Grayson CA laws may dictate something specific, but you need a contract between you and the "reverse wholesaler".  

The actual expense will dictate if the item needs to be depreciated.  

Market price dictates at least each unit could rent for $700 each but I would only go up $50 for now, making the total income $1950, and this is being conservative. 

Your lender will likely dictate how much they want you to set aside for replacement reserves?

Then I have an appraisal conducted with a floor plan that dictates a full build-out of the same space to create offices with kitchenettes, bathrooms, storage closets, etc. then should the 2nd appraisal still reflect a 9.0% cap rate or can the cap rate be lowered by the build-out?

They will dictate what you can and can't do...and they care nothing about your budget or timeline. 

The NAR Code of Ethics (Which is actually law in many states) dictates that all offers need to continue to be presented to a seller even if a property is under contract.