If it is a business that includes land/buildings as part of it (restaurant, factory, etc) then in a sale he can break out the real estate portion and exchange that for other investment real estate while paying tax on the allocation to Furnishings fixtures, equipment, and good will.All investment real estate is like kind to each other so a vacation rental is fine as well. 

Profits earned will be allocated to a 529 college savings account in their name.  

At 40 houses, even if you have a "sky is falling" month and lose 3 furnaces (2k apiece)  and two roofs (7k apiece) totaling 20k , you should be allocating around 150/mo per house for repairs min plus making 7 to 8k in net profit. 

Hi @Steve EdwardsIts relative how you decide to allocate your time.  

My CapEx is indeed on the conservative side and I haven't gone through the home inspection but I think $100 would actually be re-allocated to Lawn/Snow and set it at $200.The reason I am jumping on this particular deal is because I could be getting the house at the appraised value minus 6% (because we aren't paying realtor commissions if he sells to me).

And the ARV could be around $110k to $120k.After the house is rented out, I'd like to get an equity loan on the house for $70k and do the same process again.Of course I've considered the cost of renovations to be between $10k to $15k and allocated a portion of my budget for this.

When you buy multi family apartments how do you figure out how much to allocate for capex?

What do you have allocated for tenant improvements?

If not, is there a creative way to allocate some income from the rentals to her so that she can qualify for new loans? 

That premium to be paid is not realized until the allocation for the period has been passed or consumed.