Please see the rough numbers below :Tear down house price 350k,Construction cost 165 sqft * 2 build=627k Darnell, did you get your questions answered?

It's probably best to have them pay out of pocket for a smaller cost like this.

@Jonathan SniderFannie and Freddie do have LLPA's and the lower the down payment, the higher the cost.

Although I know most sec 8 landlords use it because of the perception of guaranteed rents.As a small home builder I really dont know how they are going to lower the cost of new construction housing unless the govmit subsidizes it somehow.. basically the price of home components are very sticky they only go up. with the xception of lumber that will go  up and down through out the year..

Also you should inquire with insurance agents about the cost to insure.

As an agent, you can also represent yourself and put your commission toward the down payment, further lowering your out of pocket costs.

If you have a good FICO, a decent down payment and closing costs, go ahead an do the first one. 

Here are a few to watch out for:Property Condition: Most distressed properties need extensive repairs or renovations, which add to your initial investment.Competitive Market: With Phoenix's popularity among investors, competition for the best deals can be intense.Complex Deals: Foreclosures, auctions, or short sales are much more complicated compared to regular real estate transactions and usually require specialized knowledge.Tips to Successfully Navigate the MarketDo Your Research: Understand the local market conditions, including neighborhood trends, property values, and potential rental income.Build a Strong Network: Work with professionals who specialize in distressed properties-such as brokers, contractors, and legal experts-to make the best decisions.Assess Costs Carefully: Factor in the cost of repairs, holding costs, and any potential financing issues when evaluating a property’s profitability.Be Patient: Finding the right distressed property takes time.

Does a cost seg or bonus depreciation actually help you in any way? 

This also leaves me with $3,750 stuck in the deal (not including financing and closing costs, which could easily add another $20,000).In total, if I had to include closing costs and financing costs, I’d have about $23,000 (if not more) tied up in the deal and lose close to $700/month before accounting for expenses.