I made certain to follow the usual psychological factors that help in business.

Settling down slower and or student loan debt are the two factors I see. 

(Big assumption, I know).I tried to find the Net Op income by applying a 20% vacancy factor, 2014 property taxes was $5,700, estimated maintenance $3,000 and insurance of $1,500.

(Big assumption, I know).I tried to find the Net Op income by applying a 20% vacancy factor, 2014 property taxes was $5,700, estimated maintenance $3,000 and insurance of $1,500.

So, our votes get factored?

And Rehab Costs would be the cost to tear down and construct the new property, including all hard and soft costs that aren't factored into the Fixed Costs.For example, if I have a house that I can tear down and rebuild a 2000 sf property that would sell for $400K; it would cost $100/sf to tear down and rebuild; I'd have $50K in Fixed Costs; and I'd want a 20% profit on the resale price ($80K), my max purchase price for the tear down would be:MPP = $400K - $50K - $80K - $200K = $70KKeep in mind that the rehab costs must account for all of the following:- Site Planning- Zoning Approvals- Utility Installation- Permits/Impact Fees- Environmental Studies- Etc...If these costs aren't factored into the per-square-foot construction costs, you need to factor them in separately. 

In general, the IRS has a number of factors it will examine to determine this. 

To work around this, i removed several things from the scope of work...things such as exterior painting, exposing bricks, finishing the basement...reducing the cost of the rehab and leaving me with projects i could work on after the rehab is complete.

If you want to be an active real estate investor and roll up your sleeves to acquire properties and rehab properties then that's great.On the other hand, if you enjoy investing passively with turnkey rental properties and that will help you fulfill your goals then stick with that.A big factor here is TIME.  

@Leo B.So as a rough guide (cause you'll want to factor in things like depreciation you have to recapture, capital expenses over time, costs of sale etc) if you bought for 400 and sold for 500 then you have 100K in profit.