For more information on depreciation recapture, see chapter 3 in Pub. 544.The recapture income reported in the year of sale is included in your installment sale basis in determining your gross profit on the installment sale.

Mine is worth around $400k with a $200k cost basis.

Anything done prior to placing the property in service as a rental is added to basis and depreciated over 27.5 years.Putting a For Rent sign in the yard doesn't matter. 

I don't know one individual on the buyer (networks) or seller (producers) side who aren't in fear of losing their job on a regular basis.

I would like to use the current rent role, with a 5% vacancy factor, as a basis for gross revenue going forward but my partners want to base of previous two years alone.

In my opinion - I think it is best to keep the two functions separate.Regarding the strategy you want to go with.How much net income do those 5 properties bring you on a monthly basis?

@Mark CooperGetting an appraisal done will determine what your basis will be on the sale.You should hire an appraiser and ask them to appraise the property as of a certain date.

If the answer is that they would share in the risk of a loss, then they deserve how much higher return than if they we're providing the money and we're not sharing in any risk.If they're sharing in the risk, it's an equity investment, and a 50/50 split is about right, give or take.If they're not sharing in the risk, then it's debt, and a typical return is somewhere between 8% and 15% on an annualized basis.

Sorry that this is not what you wanted to hear but it took me 27 years in this business to get where I am now and I am still learning every day from my mistakes and my successes.

I would email every new listing every day.