If you are simply doing cosmetic work to prepare your property to be rented, you should be ok with the type of policy you have as "tenant-occupied", as it should give you a little time to do "rent-ready" types of items like paint and carpet, etc.

And the "normal wear and tear" can be a pain, as, for instance, my last turnover, the carpet was in like-new shape when they moved in as a single person lived there since I installed it, then in one year the new tenant completely trashed it (tears down the middle, etc.), and I can only charge them a portion of the cost of new carpet simply because of the carpet's age.    

If the units have carpet work in the cost of replacing it with laminate into your budget every time a tenant turns over.Class C areas and "central air" do NOT mix!

For new carpet installed in rental, should I report as expense or capital improvement and depreciate when preparing taxes? 

It can be ball park figures.Here is a short list of line items:roofingconcrete driveway replacementcarpet install (average quality carpet)paintingreplace old pipes with copper onespest / termite tentingasbestos/mold abatementAlternatively, you could give me your ball park numbers that you use for FnF's..

Has hardwoods throughout...Was covered by carpets, pulled up the carpets today and was ready to install vinyl sheet flooring over it.  

You do not want to many investors with small amounts or it gets very messy.

I personally saw a 2.02% ($912 cash flow/$45,000 invested) return and I recommend he looks into another market with higher returns or deeper into his home turf for a better deal.3/2 SFH, 1977, 1200sqft Rent price $1,100Market Value $160,000Purchase Price$125,000Down Payment$25,000Closing cost$ 5,000Rehab $15,000 (Paint interior and Exterior) (New carpeting)Monthly ExpensesMortgage $537 (5% over 30 YRs)Maintenance $100Management $110 (out of area rental)Taxes$125 ($1600 Yr)Insurance$52 ($625 Yr)Vacancy $91 (1/12 of expected Rent) My friend’s goal is $100 cash flow; I have him at $76 cash flow.

The one general contractor that I talked to a few days ago said that he would do some walk throughs with me for free however I'm not sure how it would work as far as paying him if my offer gets accepted, because I might just take the route of hiring out my own separate sub contractors or even ones that he chooses for each job needed such as tile, carpet, roof, plumbing etc.  

It js dated as well and needs new paint, carpet, etc.