Suppose there's a market crash, rental rates fall, house prices fall, and then paying a monthly mortgage payment could prove challenging (not to mention other risks, like unforeseen capital expenditures).

These properties have to be at a deep discount to account for unforeseen problems.If you're not even allowed a due diligence period, I would recommend moving on to another property until you have a little more experience with mold, broken sewers, roof leaks, meth, etc.I just heard from a friend who bought a house in SF that, because of the competition in the market, did not allow for any contingencies.  

Hi Michael,Thanks, I ended working with Steven Hamilton... everything closed on the Exchange and barring any unforeseen issues I believe we satisfied all requirements to defer the taxes on my sale. 

Unforeseen blizzards and high snow removal costs make it difficult to analyze deals effectively if you need to have a plow come by your property a couple times a day during a snow storm, multiple times a month if its really bad.

It's not to say a highly leveraged (5% down) or low leverage portfolio (80% down) is better or worse, but you'd want higher liquidity for the less equity you have to cover those unforeseen events.

But again, you want to take whatever loan will bring you the most NOI, while keeping that money in your bank for other investments and unforeseen costs.Do you have any numbers on what your NOI might be in both scenarios?

Would this effect him in any unforeseen way?

Liquidity is important to have to handle unforeseen issues or expenses. 

Intent goes a long way in lending and if you truly intended to move in and there were unforeseen circumstances or anything beyond your control, it should pass the smell test and allow you to break the rule for the time being until the property is livable. 

@Todd Dexheimer When you say they look good on paper but in reality they do not make much money, is that a factor of not enough margin in your calculations, or unforeseen expenses?