The 1031 exchange is what allows them to do this without having to pay tax on the gain or depreciation recapture. 

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

I'm assuming you are arriving at your cash flow number by applying Gross income - cap ex, maintenance, utilities, vacancy, tax, insurance, mgt, landscape/snow & Debt service?

Taxes 10k HOA is 9k The current owner never did short-term rentals.

(gross rents $4900; 8% PM; mortgage+insur+taxes = $3600/mo).

Preforeclosure owner finance wrap, paid off the default payments and taxes with cash and assumed the owners loan.

@Shiloh Lundahl Awesome, thank you ok so having that 10-20k as a buy in is important, to first getting into it.... it helps get those first deals started.... just as an aside : I am also just starting out doing finder's fee methods - with tax foreclosure overages refunds, and assett recovery / state funds refunds... so I think those can help me to get that intial 10-20,000.... it might take me some months, but I think I can get there.... that's my initial plan, at leastAnd if I can get that saved up, then that will help me break into deals....

Low property taxes (1.1%) and not a lot natural disasters as well.

Preforeclosure owner finance wrap, paid off the default payments and taxes with cash and assumed the owners loan.

Finally, short-term rentals can offer potential tax advantages, as many expenses associated with the property may be deductible.