At the time a personal residence is converted to rental use, the tax basis for depreciation is the LESSER of fair market value at the time of conversion, or the cost basis (original cost + cost of improvements - casualty losses claimed).

A laboring GC still needs to put food on the table.

Also, I'm sorry for your loss.

One of my concerns is that the prior owners are willing to take such a huge loss on the property considering they want it to be an investment, but the broker assured us that it's been sitting on the market for quite awhile, they're unable to properly manage it from so far away, and the real estate market in the area is slow - so they've been aggressively priced to sell.Anyways, the house just next door to the east (the yellow one) is a very comparable property detail wise, but not quite as nice and it currently is leased out for $700 per month.

@Ryan Watson Ryan the problem with demo ing a home in almost all the cash flow markets and sub 100k homes is the LOTS are WORTHLESS..To replace any kind of home would cost double quadriple what you folks pay for homes in your markets..So if you buy a 40k home that rents for 700 a month..... there is no replacement value except for a catastrophic loss ( fire)..

Food for thought.

It can be good policy to keep the tenant but if they aren't asking for it, I'm probably not doing it until I need to or if there's an insurable loss..but that's me;Aside from that, you don't really need a POD and in risk more liability in moving their stuff.

Throw in a round trip plane ticket, hotel, rental car, food, etc. and it doesn't take long before a short trip can cost you $2K if you're going back east.  

Haha, not really but some good food for thought.To address your question I think one of your best bets would be doing a nonconforming duplex in Ballard or Wallingford.

HelloWas wondering if anyone has consistently been showing very little profit or even taking losses on a rental properties year after year when shown on paper.