If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.Here’s our OPINION for the Metro Detroit market (always verify each area for yourself!)

They can also stay until the end of the lease term and receive nothing for leaving.You chose to skim the entire topic and spout off twice about your own faulty assumptions.

I'm going through the FHA process because this is a loan assumption and able to get a very favorable rate.I'm wondering if anyone has gone through this process being a pure real estate investor (no W2 or other income) and how they would handle this situation.

A quick analysis tells me that if the following assumptions are true:- You're buying a house for $140K - That generates $1250/month in rent - Assuming you're self-managing with 40% expense/vacancy/capex ratio- And getting a 10 year fully amortized loan at 5% interest If you put 20% down you'll be losing about $450/month.If you put the full $60K down, you're still losing about $100/month.If you were able to pay for the entire thing with cash, you'd only be generating about 6.4% annualized return on your investment.Unless you're in a position to lose money every month, this doesn't sound like a very good deal, and certainly not a good idea to do this with a 10 year loan.Also note that if your calculations indicated that you'd be cash flow positive on this deal, then I'm guessing that you're under-estimating your expenses, under-estimating your vacancy or ignoring capital expenses. 

My initial assumptions are yes, based on the “build to rent” strategy.

And this leads to less disciplined assumptions, maybe going into markets you aren't familiar with, going higher leverage to get more deals done.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.Here’s our OPINION for the Metro Detroit market (always verify each area for yourself!)

.- Comps support both acquisition and exit cap rate assumptions.

My assumption is that I wouldn't have to pay as the paydown is against the debt.

@Eliott Elias I’m curious what your experience was if you have done this before (which is an assumption from your post).