I am trying to strike a balance between a market that can deliver month-to-month cashflow (after debt service) while enjoying some level of appreciation.

So there I was, the best of the worst in the Lousy Bowler's League.Like my bowling "career", I think that most newbie real estate investors fit into one of three metaphorical categories:Those who have spent 7,496 hours trying to figure out how to hold the ball so that it throws with the right amount of curve to hit the strike pocket and get so frustrated that they decide to give up and take up golf instead.

I've looked at raising the offer to within my strike price.Also, again if it appraises lower than my offer (if accepted), I have no equity.

This is another compounding strike against liquidity accumulation.  

If you can't strike such a deal, called a resubordination, you'll have three options.Pay off the second mortgage.Consolidate both loans with the second mortgage lender.Forget about the refi altogether.A resubordination is possible it takes more time and fees.  

The important thing is to learn how to recognize a good deal and always be on the lookout for one as you build up your assets and your network - this way, you can be ready to strike when the iron is hot.

Worst case scenario (and I've read enough stories to know it happens) you just bought a house and Murphy strikes with his best shot to bankrupt you....what's a reasonable emergency fund to cover most of what he'll throw at me without rendering me illiquid?

I might reasonable expect to pay a little more for an option valid for 3-years than on for 12-months, but only marginally.Conversely, if I were buying an option on a property in Vancouver - where real estate agents have recently been sanctioned for rolling properties through 2-3 buyers with a 50 - 100K price jump with each buyer - the market is vastly more volatile and the time component of any option (with a fixed strike) is going to carry a much greater cost ... that and it would be doubtful anyone would sell you an option out further than 12-months (if that long).Why would there not be a time component to the valuation of an option on a property?  

If you negotiate deal with the owner, you might strike a better deal.

Assure them that they can strike out any of these numbers for confidentiality.