I'm willing to do that if they will give me a minimal draw to pay my bills during the rehab phase, and give me a materials deposit.

This is a great topic more than year after the initial post because most real estate markets are in the Seller's Phase and difficult to find rental properties with good numbers. 

So I am now in the due diligence phase and working to get the inspections done.

It's a business decision but you will attempt to assist the tenants by allowing time to adjust.You can either hit them with the full amount or phase it in over a period of time (e.g. $100 every four months) so it's easier for the tenant to swallow.

In between these phases I decided to close on the building as well as the seller was going to walk and I had enough confidence in the project succeeding. 

I am in the research phase for my first property looking to do hardwoods floors, new cabinets in kitchen, new countertops for kitchen, new kitchen appliances, new bathroom vanity, new toilet, and tile for bathroom floor and shower. 

Passive losses for a non RE professional begin to be phased out at $100k, and are eliminated altogether at $125k of income.  

As a relatively new member in the learning/soaking it all in phase as a newbie investor who works full time in K-12 education, BP is essentially a 'media center' of information.

I believe knob and tube was phased out in the 40s, so it's highly unlikely. 

He is phase 1.