I also give them a rebate back at the end of the year if they conserve and use less.  

Hi @Cesar Ramirez,For the most part, six months plus a future-current appraisal must support the new increased value.Appraisers are frequently rather conservative until about the 12 month mark.

I use a set of conservative or semi-conservative rules that should keep me out of trouble if the market turns against me.

We're looking at $20k profit which is fairly conservative as we're factoring 7% for back end fees (closing, agent, etc).I grew up in San Diego so I'm familiar with the area and that's why I'm hesitant because I can't identify the fluctuation in price.

Just did a 30 year refi at a $380k valuation which is still low compared to what it is actually worth right now, but it's a cash out refi so I can see why they are going to be conservative when handing out cash like that.

I try to be conservative to ensure the first experience is as much of a success as possible because a lost on the first deal can sometimes scare someone from real estate forever.The problem I see with conventional A paper loans is that these guidelines from a qualification standpoint does not protect the borrower from a "bad deal."

With a qualification of 160K I originally wanted to be conservative and stay under 100k.  

I just want to be extra conservative on the numbers.

You could always go private money if you -really- want to go there, but if you are "new to the game", then I'd heavily advise you against brand new construction without either a construction or engineering background or if you are heavily banked.At 80-100k equity, you could turn that into 135-170k of buying power with bank financing at around 60% LTV (I'd be conservative if this was your first time going at it to make sure you will cashflow and establish that to keep working with your banks).

Even if we assume a conservative 5% year over year appreciation on your properties, if leveraged with a 5:1 ratio you should see 25% ROI or IRR with leveraged appreciation alone, not counting "cash flow".