There are IRC sections that pertain to asset basis, there is Pub guidance, there was even a recent court case related to rediness of an asset and an airplane with renovations where the tax court ruled on this. 

It sounds to me that your aqusition stratugie and price point is where I would start, the right lender is the key if your buying without cash contact me and I will share with you what I did after my first flip and how that grow.

I’m feeling overwhelmed with beginning and not sure where to even start.

I'm not sure where they might have been looking but 4 points seems a bit high based on what you just mentioned above. 

@Rys F. where is the project located? 

The issue with folks selling these loans without knowing how actual residential loans (where you DO have to be licensed and are heavily regulated) are getting people into trouble with simply wrong advice etc.

Just my 2 centsTo answer the question if it’s a tear down you need to understand the comps In That area and the cost to remove the existing and rebuild - where many go wrong with rebuilds is they assume best case construction and holding times and time is money especially if using a construction loan.

One of the main things you get from TC and I get these e mails when I am selling and the other sides TC contacts me and says  Hey we need that lead paint disclosure or we need the property disclosure  or if we are buying Hey where is your EM  all the little details .

I planning to have backyard installed in new construction SFH.I read this cannot be added to the cost basis of the rental property and be depreciated by 27.5 years since it is not an improvement to the property.But what about paving the patio and side of the garage, where it is touching the house.   

Thank you What is your question, where to start and what to do?