@Ross Sib Construction costs vary wildly depending on many factors like which part of the country you are, the type of materials used, etc.

In 1980 I graduated college with honors with a business degree that emphasized real estate.The first thing I would say about your questions is to not depend on any book on construction costs. 

Depends on the lender.

We look to rehab all of our properties based on what the local market can support and then hold the property (passive income) or sell the property (generate capital) depending on how we think the property fits in our portfolio best. 

@Joshua Horn that will depend on how your contract is worded.

I guess it depends on what your goals are?

I think it all depend on the area.

But that all depends on your risk tolerance and REI goals.Good luck!

The difference of fair market value versus what you pay would likely be considered a gift to you, which may require the filing of a gift tax return, and would eat into their lifetime exclusion depending on the amount of the gift. 

You have to little bit more specific because it depends on whether you want HML or conventional lenders.