And consider that if they had put the money in a good MM, they would be getting 5+% right now

You may have to balance spending money on things today that you may not really need until later - but, they may cost a LOT more to change later.

I personally do hard money lending and investing in the city.  

I would use that as a potential guidemap as to where you may need to spend some money. 

Anyway the point on the land basis is if you have a very low basis you have just now subjected your land equity to ordinary income and market risks on top of it.Plus personal risk on the loan if it goes bad do you have the money to pay the first off if you need to.  

Last year I barely made any money after all expenses were paid.

Growing up in a household with 6 siblings and parents working hard to survive living in California I became very observant of what others were doing to make money.

If you enter the market with the right approach, there is alot of money to be made.

Tax Benefits Once Built- Deduct depreciation and cost of maintaining the property - Deduct mortgage interest if a loan is taken outWhile I am not an accountant, I do not see where it would save you much, if any money at all.

However, I keep feeling that we are missing an opportunity to make money off of this house because of the location it is in.