That said, my houses I define as "clean, safe, and functional."  

I also think on of the functions of the Tax Collector to raise the most funds for the County in a legally permissible fashion. 

One complication is how to handle the utilities: since you will have people rotating in and out regularly, I would recommend keeping the utilities in your name and renting it out as "utilities included".

If you provide someone with a clean, functional home and take care of maintenance, they will pay rent on time and return the property in good condition.

@Dimitri Paspalaris it's all a function of roi, cashflow, appreciation, risk, comfort, regulatory environment etc.

I would not simply replace a furnace that is functioning because it has reached the recommended replacement age.

I am looking for functionality and durability. 

It's functionally an apartment with a staircase to the upstairs neighbor (Converted basement and all).

As noted, kitchens and baths can drive the most value, but if they are already "ok" and functioning, and your siding is falling off or there is a hole in the roof, then don't waste your money on the kitchen and bath.  

You compare with fully functional homes to determine the after repair value.