We own a duplex that cash flows okay right now but we are improving the property this summer; adding two more bedrooms and will be doing really well when everything is done.We have been searching for a home for the last couple months and of course I am looking for a great deal.

Adding more into the estimated repairs, adding vacancy and property management makes this a less attractive investment unless more upfront improvements are done to increase the income.

Short answer; it's cheaper.The lease is 100% expensed along with depreciation of improvements, increased cash flow, building costs are depreciated, residual is written off, tax liability impact is less, if not, they don't go there.

For a rehabbing business it may not make much difference due to relatively quick turnover, but I am curious as to what other business owners/investors are doing.I am also wondering about the tax implications of rehabs in terms of "repairs" vs "improvements", or if it even matters.

As you're starting out its important that recognize what makes a deal and then as your skills levels improve due to your greater experience, investment in additional training and education, and your association with successful peers, you'll be able to work on and profit from opportunitues that don't appear to have merit.Also, you may have to "touch" a lead numerous times before they show any interest and respond.

For tenants who are not abiding by the terms of the rental agreement, such as your aunt's situation, I would hold off on making any improvements and just tend to necessities.

equals $1650If you compute a mortgage rate of $853 (25% down, 6.5 percent, 30 year) you have a monthly cash flow of $797.This looks like it's worth a look.Now you get into specifics, like actual taxes, actual insurance, records of previous work done on the house, actual vacancy rate, and any need for larger improvements like roof, HVAC etc.Then run that against actual mortgage numbers and see how you stand!

But I don't want to put granite in if that means over improving for the area (which I think it is).It will most likely be an exercise whereby I do a walk-through with the contractor and decide what is feasible and what is not based on my budget.

Purchase price, plus acq costs, plus cap improvements, and some "get ready for sale" costs if done just prior to the sale.

Ask the agent for a CMA for the improved house if he or she balks at giving you comps.