Consequently, they are referred to as being in second position.A greatly simplified example, but hopefully it illustrates the concept.

Closing costs and loan assumptions have been copied from my mortgage consultant's Assumed Loan Cost Illustration (ALCI) that he provided me earlier this week (contemplates a 30-year fixed conventional loan with 5% down and lender paid mortgage insurance).  

It also does a nice job illustrating how adding value and adjusting expenditures can increase equity.Las Vegas Multi UnitsNoting here Vegas does scare me a little.  

The point I want to illustrate is that Cleveland is an incredibly diverse city with its own geography.

Based on those figures you would be subject to 65% of value and a loan amount of 2,2750,000, which would mean a down payment of $325,000.00.I present this scenario for illustrative purposes to help you in your endeavors.

A $200/mo increase in a commercial property increases net worth by $30,000 (using an 8 cap for illustration purposes).  

I would not recommend a homeowner work with a manager charging that percentage; the chart was simply meant to illustrate my point that homeowners need to do their due diligence in comparing their options—especially when it comes to comparing vacation rental property managers & their pricing.That is not to say, however, that any form of professional property management would kill an operation.

If you lose your buffer on your one $1 million home, you are probably bankrupt, whereas you (*should, if you bought right*) have enough slack to go vacant on maybe half of your homes in illustration 2 and still be OK. 

I also hold 7 Multi-Family buildings so I have a LOT of experience.I just wanted to comment that when it comes to CapEx, you cannot use the same generic one size fits all for every single piece of Real Estate.When you purchase Property, there are TWO things you are purchasing, the Buildings, which is where the CapEx is being generated and the LAND, which does not have the CapEx expense.For those that really don't invest in Major Metro Areas, there are some real differences between those that are NON-Major Metro areas.A funny story can illustrate how this works.There was a fight between a Couple that owned a Town House in Manhattan valued somewhere around $5 Million.

Here's a graph to illustrate this point:Think of Stage 1 being 2004-2006 at the previous peak.