Hi Tiago, a couple things to unpack here. 1) Market Value and Replacement cost are not correlated.

As long as you are buying for the same price or greater than what you are selling and you replace the same amount of debt that you have on it, you should be just fine to defer taxes.

Replace the drywall, don't add base boards yet.You can't sell to a standard buyer without it cleaned up.

The other unknown factors (not listed in your post) are if any structural framing, roof or other big ticket items are in need of replacement as well which could add to your costs per SF.For a real and accurate answer, best to get 2-3 contractor bids.

You go through the process of analyzing a deal, getting it from accepted offer to closing, working wit contractors and understanding all the components of a house, advertising it for rent, backgroundchecks, leases and ongoing property management...

Because the sewer line is something that can’t be seen without a scope and is difficult/expensive to repair or replace, scoping it is a cheap way to find out if the property is in need of an expensive repair or replacement in the near future.

Basement storage is very uncommon in this area and would be a continued nuisance for us re: pest control, utility replacement, and addressing the work we have planned on the building which includes structural work in the basement. 

Alternatively, would you choose to keep these expenses since an HOC could in theory require a 1x fee if they are short on funds and need to do a major project like replace the windows, pave the parking lots, etc?

TBD - planning to update cosmetics to current market trends, replace HVAC and other Critical components What was the outcome?

I am currently buying and replacing my tenants air filter.