Most I've seen are content to calculate the boot as profit first and depreciation second.If the latter then whatever you take out will first be tagged as boot from profit. 

Its a 50/50 split on the profit end.

He then makes a profit.

Because we got it for such a great deal I am trying to figure out if I should put a little bit of money into it and flip it for a rough profit of 20k-25k and use that money for a down payment on a duplex, triplex or fourplex.Would you guys hold it and rent it or flip it and use the profit for more units?

Building was reassessed, so taxes went up, eating away at my non-existent to negative profit margin, and making this financially more precarious. 

Seems like a novel idea but I would want to see the numbers and make a decision how profitable such a process can be.

If I can be sure I’ve covered all of that, I’m happy even if I’m not technically making a cash profit because any money I take in during 12 months of no big fixes will be wiped out eventually.

Would like to talk with people to see what it takes to start to build a profitable rental portfolio or flipping houses in this area. 

Regular ROI includes the pay down of principal on your loan as profit (this is also how the IRS calculates it). 

Offering the owner a cut of the profit when you sell is probably the best offer.But be sure the numbers work.