Once you exclude that, it should make sense.

@Yonah WeissHey Yonah thanks for your comment - you pretty much answered my question.But to follow up on your land comment, if the land portion was around ~30% of the hypothetical purchase price of $10MM, does that mean the cost segregation would only account for ~20% of 70% of the purchase price (excluding the land portion)?

(Excluding utilities which I will split w my roommate).Bringing my yearly cash flow to negative 853 dollars per year.Now this is for the first 2 yearsBut after, I plan on refinancing, (any advice on this again would be great), moving out and renting that unit for 650.Adding expenses such as 10% for PM, upping the maintenance to 1,100,Bringing my yearly income to 3,831 per year.Thoughts?

(Excluding utilities which I will split w my roommate).Bringing my yearly cash flow to negative 853 dollars per year.Now this is for the first 2 yearsBut after, I plan on refinancing, (any advice on this again would be great), moving out and renting that unit for 650.Adding expenses such as 10% for PM, upping the maintenance to 1,100,Bringing my yearly income to 3,831 per year.Thoughts?

@Nick RutkowskiYou may want to consider a contractor agreement where the GC will get a bonus of ____% if completed quicker and under bid also a penalty for each delay and or cost overature excluding change orders

That means that new construction is definitely out, and that almost always excludes condos as well.

It may just be that the seller wants too much and there is no solution but I was hoping investors with more experience than myself in this area could provide some insight into how they would value this and how much of a hit to cash flow would be acceptable in exchange for future potential.The details:4-unit purpose built building in an average residential areaCap rates for 1-4 unit properties range from 6-10% depending on quality, location, conforming vs non-conforming etc.Asking price $520k, dropped from original $550k and has been on market for a few monthsRents are ~$34,000 and should be ~$48,000Expenses (excluding maintenance) are ~$9,000 - This puts the asking price cap rate at ~4.7% (not including maintenance)- We estimate that at asking price it would be about -$260/month in cash flow and break even at a PP of ~$450k assuming our typical 10% of rent for maintenance- We estimate the building would be worth around $530k at market rentsWe were thinking the cash flow neutral price would be our best offer, but their indication was that they are looking for close to 500k. 

Excluding land, tap fees, & engineering, etc.: about $135 sq foot.

@Bruce ReevesSection 121 exclusion allows you to exclude $250,000 of gain if you lived and owned the house for 2 out of the last 5 years.Gain is calculated as selling price less adjusted basis.

Given that she is current on rent excluding late fees, I would try to just stay the course and hope she gets out tomorrow or the next.