It also includes an interest held by a taxpayer in a  trade or business that is not a passive activity and in which the taxpayer does  not materially participate.Based on the above, I think the interest would be classified as Investment Interest and go on Schedule A since the notes fund produces interest income. 

And the worker was payed simply for his labor/materials.

There is always some material/s to learn in order to be successful.

Does anyone have recommendations on replacement material (carpet vs. hardwood) and know how improvement estimates should impact a potential offer vs. the listed price?  

It allows you to retain your license, should be already be licensed.

We negotiate each item and can certainly bring it down) Try to get it in order for a SW.Tear down: $500Permits (vary): $250Footers: $750Concrete in footer holes (some localities require - CHECK ON THIS): $500 (varies by size/amountMove: $1500Set (block/anchor/level - anchor/strap/shims/hardboards included): $1500Block cost: $250 (in addition to bringing your old blocks)Transport decks (will NOT take big decks): Negotiable - around $500/deckBuild decks/landing for inspection: $500 per landing (minimum landing and usually 2 needed)Hook-up (water/sewer/electric): Can vary widely, but assuming "standard" hookup it is $250 labor for each plus material.

NOTICE: If Landlord fails to repair a condition that materially affects the physical health or safety of an ordinary tenant as required by this lease or the Property Code, Tenant may be entitled to exercise remedies under §92.056 and §92.0561 of the Property Code.span>If Tenant follows the procedures under those sections, the following remedies may be available to Tenant: (1) terminate the lease and obtain an appropriate refund under §92.056(f); (2) have the condition repaired or remedied according to §92.0561; (3) deduct from the rent the cost of the repair or remedy according to §92.0561; and (4) obtain judicial remedies according to §92.0563.

Homewyse.com that will help in your rehab costs, the web site will give you a high and low cost on labor and materials install by professionals in your zip code.If you should have any additional questions please feel free to contact meTom

I own a contracting business and my labor and material costs are minimal.

Ok, now that you have taken your initial step, below are some quick links to get engaged.You mentioned an interest in house hacking and rentals and as such I added links on these topics.https://www.biggerpockets.com/renewsblog/2013/11/0...http://www.biggerpockets.com/renewsblog/2013/01/04/how-to-rent-your-house/ (house rental guide)http://www.biggerpockets.com/startherehttp://www.biggerpockets.com/meetSetting up Keyword AlertsHow to Use @Mentions on BiggerPocketshttps://www.biggerpockets.com/ruleshttps://www.biggerpockets.com/inviteshttps://www.udemy.com/biggerpockets-real-estate-investing-course/ (video with 64 lectures and approx 6hrs of material)https://www.biggerpockets.com/real-estate-investing (Ultimate beginner's guide to REI)REI can be very daunting, but, before you go searching for that 1st buy, please take a few minutes to bone up on the tips in link below.https://www.biggerpockets.com/renewsblog/2014/12/19/real-estate-investing-success-smart-tips/REI books suggested by BPershttps://www.biggerpockets.com/renewsblog/2015/11/13/7-real-estate-books-beginner-investors/ (7 absolute must read books for beginner REI)http://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/?