- Highly recommend REQUIRING tenants to get Renters Insurance and adding you, as the landlord, as additionally insured.

Another must have requirement is to have positive cash flow.

In addition due to prop 13, the tax base is a fraction of if it sold today.   

I would appreciate any positive or negative comments on your experience with this investment opportunity. 

Sounds like you are in a pretty strong financial position.

They have a rating for each position, and if it hits a certain one, and market moves in certain ways "pow" they can just dump. 

I just re-read and realized you're talking about getting loans for lien position 2, is that correct?

He'll have at least $2k per month in positive cash flow and tons of equity when it's time to find the next home in some years.

Those that cannot weather the storm get wiped out.Having cashflow positive properties provides a margin of safety you just do not have with negative cashflow.Why are you focused on buying in your backyard? 

I see that real estate agents and brokers are too negative on sub to deals……investors looking for low interest rates and or low down payments are too positive on the same.As I stated the reality is somewhere in between, depending on individual circumstances.