My first step would be to get on the phone with each of the utilities and see what is even feasible.Quite often you are limited by infrastructure and those limitations will cost you to improve them.

I'm partial to lower CAP rate properties that have room for some improvement (such as this one).  

I could put 25% down, but would like to try for 20% to ensure i have plenty of money for improvements, reserves, etc. 

Sorry to be dense, but let me run it through one more time to be sure I understand.Purchase price + improvements $100kDepreciation 20kAdjusted basis 80kNet sale price 180kCapital gain 100kYou seem to be saying this in the post I quoted:Ordinary taxable income after deductions 30300 - tax 3618 Depreciation recapture 15% of 20k                      - tax 3000Capital gain at 0% 25k                                          - tax 0Capital gain at 15% 75k                                        - tax 11250Did I understand that correctly?

All improvements are in and plotted ready to build on.

Both showed up in the city permitting so no issues there.Frame new bedroom in front portion of houseRepurpose laundry room into master bath suiteRepurpose current master bath into master closet and washer/dryer closetEnlarge openings into kitchen and family roomTotal kitchen gutReplace all windowsRelocate front doorAdd front deck and replace back deckAdd central heat/air as the house had window unitsWhen we first walked the property the front room felt like it sloped.

You could go several months with no costs whatsoever, and then get hit a $3000 air conditioning bill.My question regards how people handle this with capital.  

The property is in what I would define as an A neighborhood, in general it should have very low vacancy and potential for continued improved rents, maybe even appreciation (although I wouldn’t count on it).

I am an investor and licensed Virginia Realtor living in Northern Virginia who enjoys transforming and improving communities by rehabbing run down and abandoned properties and making them available to families who would otherwise be unable to afford a home.

IMHO, Lease Purchasing is an awesome investing strategy out there but you need to have a good understanding - which means educating yourself thoroughly and having air-tight contracts.