Specifics such as build-out costs and how they were allocated, lease term (5/10 years), NNN vs Gross, etc would be super helpful. 

The way to handle it is to allocate expenses based on the percentage of the home’s square footage used for rental purposes.Here’s how it works:Calculate Rental Percentage: Add up the square footage of both the in-law suite and the rented room, then divide by the total square footage of the house.Apply This Percentage: Use this rental percentage to deduct a proportionate share of expenses like repairs, utilities, and mortgage interest.This post does not create a CPA-Client relationship.

Quite a steal and they get snatched up pretty quickly but if you crunch the numbers, even with the high interest rate you get pretty close to cutting even on your rent (after you allocate X amount to unforeseen property costs)

@Richard Chang,  Your basis (read that gain) goes forward as an allocation into each of those properties.  

Even if there has been no vacancy, vacancy needs to be allocated as there will almost certainly be a vacancy. 

@Evan Polaski yes the cash that I’ve allocated is going into low volatility liquid securities that also generate some yield.  

Typically a cost seg can provide a ton of benefits to accelerate depreciation on pieces of the purchase that wouldn't usually be allocated out under normal circumstances. 

 $1800 (high end of rent range) - $1535 (hopefully mortgage includes full PITI) - $90 (5% vacancy) - $400 maintenance/cap ex - $180 PM (at that low rent point I am using 10% all inclusive) - $50 misc (bookkeeping, utilities that are not tenant responsibility such as slab leak, tax man, allocation of asset protection, etc).  

hey guys, quick update we finally got our four-plex and we are super excited. As I mentioned before it is my friend and her husband and I. Each contributed a third of the amount for down payment, since I'm single I'm ...

So do we want to allocate time and money to making sure people who are lazy, stupid, or both are comfortable?