I then have to do battle to get the assessed value reduced to purchase price, which they do finally but it is a minor battle.

Make sure its priced accordingly (longer vacancies, reduced rent and possible future expansion to a 3bed-2bth).

Being right on the cusp of being "within spec", you might find that you regularly do exceed what is considered acceptable pressure.http://wiki.answers.com/Q/What_is_normal_house_water_pressurePressure reducing valves aren't all that expensive, and you can probably install as DIY if you were able to change tub valves.

Because you'd likely be paying a GC more than this anyway, this arrangement is fair -- your employee gets paid, but the total cost of the rehab is reduced by not hiring an external GC.

If anything it will be negative in that you will reduce your interest expense and therefore your deduction that you could take.

A reduced maximum exclusion may apply to those who satisfy part of the two-year rule.

Absolutely agreed...in fact, we tried out best to design the house in a way that would maximize appraisal while reducing building costs...mostly by playing around with the above grade versus the below grade square footage and finishing just enough of the basement to get appraisal credit.The question was more from a "what do lay-people generally mean when they say/hear square footage" standpoint...or even what do builders mean when they use the term.I'm fairly certain there's no "right" answer...everyone will have their own opinion...I'm just trying to form mine... :-)

There are easier ways to reduce expenses.

If the PM can tell me what they are doing to reduce vacancy and increase renewals, then I am happy to pay.

If the answer is no you need to walk away or reduce the price.You want to have if the rents increase and all this other positive stuff happening after you buy it as icing on the cake and NOT to make the purchase worthwhile and viable only if these events occur.