Its intended use in this case is that the property is ready for someone to live in which includes items as a roof over the house, a working bathroom, etc.The cost will be added to basis and depreciated over its useful life.Think of it like thisProperty A is rent ready and cost $200,000.Property B is $150,000 and it will cost $50,000 to get it to the same condition as Property A.The IRS wants both of these properties to be at a similar starting point.If it wasn't the case - You would be reporting $0 of income since its not rented but take $50,000 of expenses.

Though talking to my realtor, there's a reason why these properties are priced so low lol.I haven't personally driven through that area, so something I'll have to look into.

Once I am more knowledgeable on structures and tax I'll have more direction (UK LLCs may present me issues back in the US as a I have worldwide tax obligations in both countries now).

Short sales are purchased the same way, but you would want to make sure the side representing the short sale property has an experienced team and you use an attorney (Illinois is an attorney-driven state) that know what they are doing regarding short sales so you do not spend money you do not need to and you can get out of the contract if the process drags too long. 

Have you already "Driven for dollars" and sent the potential distressed properties a letter?

I am a forward driven creative, innovator, musician and serial entrepreneur.

@Brad Martindale - I lived in Amarillo, seems like I have driven thru Dumas a few times...Just looked it up...it has a whopping 15,000 population! 

Plan A is to rehab the property into efficiency/studio condos and sale.

@Llewelyn A.

Nevertheless, @Eric A. is correct that your mortgage company will require it if you have a loan on the property.If it makes you feel any better, many (maybe most) of the other vacation rentals in your area also will be paying for windstorm insurance.