Normally the allocation of income should follow the economic effect of transaction.

This is your depreciation on the stock.Your depreciation deduction for the year can’t be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property.

They may make plenty of money, but it may very well be allocated elsewhere.Rental history.

Also, it's difficult to rationalize allocating funds to a retirement account which may yield 7-9% annualized when you could get 20% cash on cash in a rental property which also has the potential to appreciate.Personally, I contribute 8% pre-tax to a 401k and I also get a company match.

This may sound overly simple, but we allocate $50/unit/month.

ORAm I forced to allocate the expenses according to the proportion of the house that is rented vs. the proportion I live in? 

The decision between borrowing hard money and using your own cash amounts to the risk you’re willing to take, how much time you’re willing to allocate, and the discount you can buy properties for.The rehabbers I tend to work with could probably buy and flip two to three properties at a time completely on their own.

If I turned down deals that would have profits of 400 per month per house with no money down (regardless if its seller financing or thru hard money buying), I would only have about 3 or 4 houses instead of 19.That is my exact target number for a good deal.And I typically have to finance the thing twice to do it (hard money and then the perm loan).The fact is if you're allocating more than 400 a month per house toward vacancies and repairs, then you're going to have a real tough time ever getting into investing in the real world.And the fact that he's picking up 3 in one fell swoop is even better.

Any tax beast opposing your allocation will need to weigh the benefit of time and effort expensed in assessing the issue diferently, not worth the effort of any auditor I'd think, unless you had other issues in question.

How much time do you have to allocate to real estate investing??