It seems like a lot to someone who is trying to save that on their own from their day job to improve their position, but in all reality, you can make a great ROI on that money in real estate if placed correctly.

Nothing wrong with a two-story but the preference would be a single level to be more rentable.You may want to improve the property while you live there also, do so cautiously and with the intention of making it a better rental property.

There is always something.Why do you expect an ARV $5k higher than what you paid with no improvements?

The leases the tenants sign have a clause stating the landlord reserves the right to make improvements on the property and the construction will be during normal business hours. 

@John TiernanDepending on what you will be able to charge for rent and what the ongoing maintenance costs of your property, you likely got a good investment on your hands if you are all in for $35,000.Regarding your question on what is deductible - It depends.it seems as if your property was not "placed in service" until after the rehabs were completed.If this is true - then the costs to improve the place need to be added to basis and depreciated over it useful life.

All this time at home has spurred some home improvements and getting prepared to sell and also some families have experienced unfortunate events that cause downsizing or selling.

Not a ton of new construction going up in these areas so if you can find something to improve upon you'll be able to command a good rent.  

9.43.010 COMPATIBILITY IN RESIDENTIAL ZONESNo person shall construct any dwelling, accessory building, or structures, improvements, patio covers, roofs, balconies, decks, porches, terraces, exterior steps or stairways, walls, fences, antennas, spas, swimming pools, or make any additions to, or modify, any structure, or install a new roof on any structure, on any parcel in a residential zone in the City for which a building permit is required unless the resulting construction is found to be compatible with the neighborhood within which it is located.

So, there isn’t much precedent on improved properties.As was mentioned above, my understanding is it goes back to intent.

Ask tenants for their ideas and help in improving the situation.4.