I will also be having an electrician add more outlets and double check that the knob and tube is completely replaced (inspections came back that it was but double checking), plus I will re-insulate all the outside walls before putting up sheet rock.

If there is any unexpected charges that come up during the rehab you will be lucky to break even at that point and will most likely be looking at taking a loss.

When I say tax purposes, I mean that (1) the lender isn't hit with some fee or unexpected tax, and that (2) the borrower is able to consider loan payback as a deductible expense every month.From my research it seems like the only requirement from the IRS is that you meet the Applicable Federal Rate.

New ordinances state plumbing and electrical does not have to be replaced, just outlets, switches, and fixtures. $5 per sqft for demo and new drywall (including trim)$20K bathrooms (2; A-- level fancy)$15K for cabinetry/countertops kitchen (quartz, farm sink, etc)$1K for outlets/fixtures/switches$5k for paintFlooring & Ceiling don't need to be replaced and not changing floor plan$500 City Code Permiting/InspectionsWith acquisition, closing costs, and if my estimates are true, it would still be worth the cost as it would leave about $50K of a buffer after renovations from current comps.

“If you are looking to stay in this game for years to come, unexpected events like this are going to come up once in a while.

I want to keep the property as my first rental and am wondering how high I should prioritize updating outlets, many are ungrounded and not GFCI protected.

Be sure to get multiple quotes from contractors and get a detailed breakdown of costs before starting any work.It’s also important to factor in contingencies for unexpected expenses, and always consider the After Repair Value (ARV) of the property to ensure that the renovation costs are in proportion with the potential return on the investment.

@Jaime Osuna Whichever way you decide...keep a bit of a buffer and some grit to deal with unexpected issues. 

I’m the Fresno local Bigger Pockets Premium Agent, if there is anything I can do to help out let me know.

Also watch out for unexpected expenses, bad tenants, property repairs, inspection fees.