With rates at this level I an not sure places will cash flow at 80% loan value. 

The reasons are 1- less competition in commercial2- greater property types lead to more opportunities for “value added”3- commercial net income projections include expense for property management, 1-4 unit residential usually do not4- greater “universe” of properties to buy allow higher minimum return standards Of course residential is MUCH easier to successfully deal in, and with reasonable leverage has small downside risk, so I 100% agree that most investors should stick with residential.  

I would go 2 bedrooms, it will have more value as a regular rental, airbnb and future appreciation.  

For example, a 10-year-old carpet has outlived its normal life and no longer has any value. 

However, Iḿ glad you still have the stomach for it because  maybe small in numbers, I know a handful could be genuine. 

also, let’s say prop value/purchase cost is 500k brought in tax year 2023, can bonus depreciation be applied to take max tax deduction on year one ?

I can do much of the work myself and increase the value of the property significantly more than buying a house that needs less updating. 

How did you add value to the deal?

@Adam Marx Unfortunatley, most wholesalers won't allow any inspection period or contingency, that's kind of the risk of buying from them, but the benefit of getting a property under market value and without much competition. 

@Peyton LaBarbera - From my experience doing foreclosure auctions in CT, you need to have a cashier's check for 10% of the "appraised value" which is defined in the foreclosure writeup.