@Catherine Curtsinger To play a little devil’s advocate I have been house hacking for 30 years.

Their goals and upcoming upcoming purchases may come into play. 

Quote from @Sebastian Bennett: It's funny because I actually had a dream of setting these up and seeing how this would play out lol

It's a really high-energy dog and I don't think they take it out often enough, so they play indoors a lot.

Like with anywhere else: location, pricing and the overall house you intend to build will play a factor in your profits.

So, you're not "wrong" in thinking it's complicated.The tax code plays heavily into how certain transactions are categorized and there is some flexibility regarding what we can capitalize versus deduct.

Preference is cash-flow, but open to appreciation/equity plays as well. 

What incentive is there for them to perform well on the deal if they have already made 18k off of you and it is only your money at play. 

Like playing loud music in the middle of the night if you upset her which goes through the walls.

They are really close to where I work and it's definitely a great long term play with all the investments going on around it.