This might be tying up too much capital for a minimal return. 4.

A follow up question is whether or not I would be subject to capital gain taxes since the loan will be considered an "investment property"?

We are giving preference on capital gain only.

In my opinion a cash purchase in low to moderate income areas could net a 12% cash on cash return with potential for capital appreciation.

Without a significant income, I'd be a little nervous having to cover debt service (even if it was at a low interest rate) with capital I'm supposed to have as reserve or for investment.

If the buyer capitalizes the closing costs, how exactly is he extending the loan term?

having the seller pay $xxx or reducing the purchase price by that $xxx5. what is a closing cost "rebate"i assume for #1, the amount is capitalized (increases the tax basis) and depreciated over 27.5 years.

If we decide to sell it at some point, I know that if we lived in it 2 of the last 5 years we don't get hit with capital gains.

Currently just seeking deals, learning what I can what the time I have available, raising capital with private money, and trying to think outside the box and not do what everyone else is doing in my area.

He's sacrificing capital growth as a result.