@Lane Kawaoka,  I understand, I have similar thoughts..

And, YES, I know I probably got myself into this situation and I've certainly picked up some lessons learned with this one about screening and not being in a hurry to get people in there to rent.Just wondered if anyone else has experienced a similar situation.

There are also 2 other bidders, one of whom offered 25% down payment, but rest of offer was similar to ours. 

Similar downpayment of 5% (as opposed to the FHA 3.5%) and the closing costs will be lower. 

The other is similar acreage on the county road so lots of traffic.

Hi Jonathan,I have closed a number of deals with self employed individuals in the last year and have similar points to make as the above posts.

@Paul WinkaI have a similar situation, only the "interest" I got was reported on a 1099-Int, even though I haven't gotten all my principal back, and may never get it back, we'll see. 

Two of the safe harbors that can help you deduct improvements are below:1) 2500 de minimis safe harbor.the safe harbor applies to amounts paid during the tax year to acquire or produce what the regs call a “unit of property” (UOP), you must meet these requirements: (1)you need to have written accounting procedures treating as an expense for non-tax purposes amounts paid for property costing less than a specified dollar amount (which will be 2500 for you), or with an economic useful life of 12 months or less;.(2) the taxpayer treats the amount paid for the property as an expense on its books and records in accordance with its accounting procedures. ( do this on your bookkeeping software or whatever you utilize)(3) the amount paid for the UOP doesn't exceed $2,500. as substantiated by the invoiceNote: The cost for the Unit of Property includes l additional costs (for example, delivery fees, installation services, or similar costs) if these additional costs are included on the same invoice with the property.2) Small taxpayer safe harbor: To be eligible for the safe harbor, the total amount of improvements for the property for the tax year may not exceed the lesser of $10,000 or2% of the property's unadjusted basis.If the total amount paid exceeds the safe harbor threshold, the safe harbor does not apply to any amounts spent during the tax year.

I have an interesting tool for converting real estate deals into analysis similar to what you would present for stocks or mutual funds.

But here's a few tips based on similar stuff I'm working on. 1) Drive to or hire someone to drive to every similar property within 50-100 miles.