Hi,If I buy a apartment doing a seller carry back, how do I explain to the seller how they are protected if they carry a 2nd position note subordinate to the bank?

This is most of the depreciation you are taking year one.You can calculate your depreciation recapture by taking the sale price of the asset and subtracting the adjusted cost basis.The adjusted cost basis is what you paid for the asset plus any improvements you made along the way minus the depreciation you took along the way.The profit above this original cost is taxed as a capital gain, but the part linked to depreciation is taxed at a maximum rate of 25% under the unrecaptured gains of section 1250.To recap the tax rates are:- Sec. 1250 real property: 25%- Sec. 1245 property and 15 year 1250 property: Ordinary Tax RatesThere are ways to minimize depreciation recapture especially if you know how to work smart with your CPA.1) Asset Valuation at Time of Sale - Sellers can minimize recapture by reallocating the price of the assets on sale.

Happy to help.

I would be inclined to not hold on to a cash flow negative property, I see our costs only going up. 

Welcome to BP! 

How are your reserves and credit score?  

I imagine you may be in for a surprise here in IL with how real estate is transacted.

It's a good time to start reconciling the year if you haven't already

I would assume the same applies to a VA loan.

Good morning BiggerPockets,I am a new investor/wholesaler and I am trying to understand the most effective way of finding the ARV of a property without having access to the MLS?