I know here in Jacksonville, Fl the monthly rent allocations are very good for section 8 tenants.  

What do you have allocated for tenant improvements?

Maximum ExclusionYou can exclude up to $250,000 of the gain (other than gain allocated to periods of non-qualified use) on the sale of your main home if all of the following are true.You meet the ownership test.You meet the use test.During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home.So, my thoughts now are, If I find a great property, rent my current house out,(1 year min?)

Unless it is effective 1/1/14 a profit and loss should be prepared as of that date for the accountant to prepare your K-1 to allocate gain/loss properly before and after the percentage change.Feel free to ask if you need clarification.

How would you allocate it? 

I offered a total package price and let the seller allocate the total amongst the homes as he wished.

But this is my personal view.Being able to allocate funds far from you, then choose the best return (possibly in a jurisdiction you know and you trust).And this comes from an Italian investing in USA.

We've looked at the comps but aren't really sure about how much to allocate for piering.

You'd have to re-amortize the principal allocations monthly as the interest rates will be different. no finance program I know of for investors, too sophisticated, but you can do it by hand, if you know how to use weighted average allocations on a per diem basis over the term of the loan.

I have seen people make the case because a property has just been rehabbed to allocate a lower cap expense number.