I’ve done two rehabs from out of state so far, and I can relate to the challenges you mentioned.One thing I learned the hard way is that managing rehabs remotely can be tough.

85LTV ask on a LTR rental is a tough ask, when adding an STR factor, nearly every lender will reduce max leverage by 5%. 

A good baseline is to calculate material costs (e.g., $300 for paint and supplies) and add a fair hourly rate for labor.

What is the best way that you have found to tell them that you need labor & materials separate, so at tax time you can send them a 1099 for labor?

Any recommended reading materials, please. 

If this stretches to 9–12 months, holding costs could climb fast.I like your point about tightening the rehab costs, I think there’s room to bring it closer to $100K with the right contractor and materials.

Materials have increased more than 20% in the last 5-8 years.

You can break it out by general RE activities and material participation.

Overall, CRE is tough in finding deals right now regardless of asset class, and people are pessimistic about the next few years.  

(after I deduct all the labor/material costs).