Kitchens in San Diego have around $50/month cap expense (a lot to go wrong in a kitchen (refrigerator, stove/oven, garbage disposal, dish washer, plumbing, etc.) and typically need full rehab at 15 to 20 years). 

Here are the numbers:House 1) Purchase $110kARV $198k Needed Repairs $10k (Fix garage door, broken fence, front porch tile, tile master bath)Additional Upgrades $20k (Upgrade dated kitchen with painted cabinets, new countertops, backsplash, appliances and flooring, upgrade stackstone fireplaces, increase size of master bath shower and upgrade with tile, laminate flooring throughout).10k would make it the cheapest home for sale and $30 would make it the nicest home for sale.

This is a quick local condo flip where you are putting in about 20-25k which included an all new kitchen, floors, paint, bathroom, etc.Everything went smoothly in this flip except it took 1-2 weeks longer than normal.

Working with a GC for most of the work on the bathrooms, kitchen, and replacing some of the windows and he had a very reasonable charge and schedule.Now the painters in the area are another story.  

If you go to sell it with them in there you'll loose 10% off the value of the home in transaction costs not to mention how much you loose off the value of the home by selling it with tenants inside of it when it's clearly not a house that is geared towards investment.So let's do the numbers on this.Let's say value of home is $125k.You'll spend $12,500 in transaction costs (Realtor commission, Title cost etc)You'll loose another $20k selling it as a beat down rental (No 10 year rental comes with fresh carpet & updated kitchens guys)So right there you're in the hole $32,500. 

Just some cosmetic things to touch up (paint, kitchen cabinet paint, cleaning)If the property sat empty, we would still be able to afford the mortgage payment rather easily.

The house is overall in solid condition, just needs an intense cosmetic rehab with new kitchen and baths. 

So I asked what would constitute overnight sleeping and it turned out as long as it did not have a kitchen it would not be considered a dwelling for overnight sleeping arrangements. 

Common areas, bedrooms, bathrooms, kitchen, etc?

I There are about 8 normal sized windows and 3 or 4 smaller windows in bathroom/kitchen areas.(*) Rough plumbing - waiting on his plumber to estimate but he thinks $4,000 which was one item I was a bit suspect of because basically you have a bathroom in the basement with laundry beside it, kitchen above it, and bathroom above it, basically all straight up and down in a small house and this is not including bathroom vanities, toilets, etc.(*) Flooring -  $8400 - we didn't actually finalize anything I'm not sure what materials he was planning all over, but I think wood floors in the top 2 levels and engineered wood in the basement, tile in bathrooms and kitchen area (very small).