Yes, location is a big key and then its the "classification" of the neighberhood your subject property is in.  

Why not just do "Subject To" to the seller and when you sell the project they get cashed out.

Now I can get $40k doing Subject To and not have to rehab.

Sorry if I'm asking an already answered question, but I did a couple of searches on BP and didn't find anything that directly addressed this subject.

You can apply your rental rate for the subject property to theirs and at least have a percentage adjustment to worth with.

Reed Goossens Reed has great material and posts in BP in this subject.

Unfortunately I do not have much knowledge on the subject.

To them, it is the exact same business model and is subject to Self Employment Taxes as well as Income Taxes.  

But speaking from rental property experience, and talking A LOT with my tax accountant over the years to better understand this...I think you may be confusing your Schedule A deductions with Schedule E deductions.What you describe is basically correct for your Schedule A deductions, such as the mortgage interest and property taxes on your primary home or a second home.But rental property Income/Expenses are recorded on Schedule E, and are subject to Passive Activity rules.

If you tear it down first and things have changed when you try to obtain the new building permit you are now subject to the new and probably stricter guidelines.