Biggest problem people run into is not doing full rehabs, then setting aside nothing for capital costs, having units with low cash flow, deferring basic maintenance until things completely die, and trying to live off of the cash flow.

But there are many ways defer/avoid that.Writing off the same year gives you advantage because of the time value of money.

I dont have alot of cash to put down at the moment but I’d be a first time home buyer, I can be the Realtor, she owns it free and clear, she wouldn’t have to make repairs as I would buy as is (with many concessions on her part due to some issues and deferred maintenance) and she would have her taxes paid up. 

That's an effective rate of 2.5%, not too bad.If you really want to defer (not avoid) the CGT, you can rent the property for a few years after moving out.

I believe by definition, most foreclosures properties (not the owners) are ugly(deferred maintenance and updates)  then the loan balance and late penalties are significantly more than the market rate.  

Well, maybe in a few years, but I'm paying for deferred maintenance and CAPEX now.

You continue to defer your tax and still get to continue depreciating the asset as a tax break.

Every plex I see that's getting work done to it or shows signs of deferred maintenance gets a letter or postcard from me. 

Note that each year you do the conversion it will be included as taxable income in the year you convert it...so be careful about converting a large amount that will push you into a higher tax bracket.I would be careful about deferring too much tax inside of traditional retirement accounts.

The items I mentioned can quickly sum up to $40,000 - if you can defer that cost to later it will help you to recycle all your money.