Treat your rental properties like a 401k.

Treat it as a cost of doing business.

However certain markets will treat these 6 units based off of previous sales as a price per door type approach and ignore the income approach all together.

It will be treated as income but you deduct the water bill against it so it should come close to zeroing out.

@Michael BakerHi Michael,I have decided that a duplex is the best move.I have a max purchase price limit that I wont go above or I won’t have enough money to finish the process.There are duplexes available at or under my max number in my area.Basically I have budgeted to hold for 2 months while we renovate.10% down is what I am planning to put down.Then I have enough left for reserves, closing and all the other costs associated with closing the deal.It would have a low cash flow if I treated it strictly as a rental (at least at the beginning).I have some plans to increase the income on the property that will allow me to cash flow better within a year of buying it.

Can it be done....yes, but the risk / potential to lose a boatload of money is greater.For starters I would completely gut the house to the studs to ensure I find and treat any potential mold issues and electrical issues.

@Duke Giordano @Christopher Nemlich @Rick MartinSome operators will be upfront about this and they will say: Treating distributions as return OF capital is good because return OF is not a taxable event whereas return ON would be.

Telling us how to survive and treating our lively hoods should be a crime in its self. 0The elephant in the room is tenants who have no issue making rent taking advantage and just stop paying.   

At a later date, if we want to cash out, we can sell the note to a note buyer.Here's part of our strategy:  For the long term, when we do a buy & hold, I treat it as though I'll hold it for as long as I live... 

In you case its a single family so as a courtesy I would treat it for the mouse issue once then notify the tenant that a. when she moved in there wasn't a mouse issue, and b. she is responsible for any issues moving forward.