Seems to me you need 2.5 - 3 times that cash flow to make that work and also reduce your risk.

Any suggestions on financing such units are helpful.Also any help that can help me reduce expenses of multi-unit housing.

I then have to do battle to get the assessed value reduced to purchase price, which they do finally but it is a minor battle.

Make sure its priced accordingly (longer vacancies, reduced rent and possible future expansion to a 3bed-2bth).

Being right on the cusp of being "within spec", you might find that you regularly do exceed what is considered acceptable pressure.http://wiki.answers.com/Q/What_is_normal_house_water_pressurePressure reducing valves aren't all that expensive, and you can probably install as DIY if you were able to change tub valves.

I definitely plan on being pro-active and making the right decisions this time around.

Because you'd likely be paying a GC more than this anyway, this arrangement is fair -- your employee gets paid, but the total cost of the rehab is reduced by not hiring an external GC.

If anything it will be negative in that you will reduce your interest expense and therefore your deduction that you could take.

A reduced maximum exclusion may apply to those who satisfy part of the two-year rule.

Absolutely agreed...in fact, we tried out best to design the house in a way that would maximize appraisal while reducing building costs...mostly by playing around with the above grade versus the below grade square footage and finishing just enough of the basement to get appraisal credit.The question was more from a "what do lay-people generally mean when they say/hear square footage" standpoint...or even what do builders mean when they use the term.I'm fairly certain there's no "right" answer...everyone will have their own opinion...I'm just trying to form mine... :-)