Credit (loans) become much more difficult to obtain and if available you pay a MUCH higher interest rate with a much higher down payment requirement2.

If you use it as several down payments and use leverage you could be off to the races with many more Class B or C units that will still cash flow for you.

Principal Paydown: $2,441 Total Gain: $58,317 ROI: 360.32% (on $16,185 upfront investment: 3.5% down payment of $8,715 + 3% closing costs of $7,470).Year 2 Analysis Cash Flow: -$752 Home Appreciation: $6,120 Principal Paydown: $2,617 Total Gain: $7,985 ROI: 49.34%.Year 3 Analysis Cash Flow: -$375 Home Appreciation: $6,242 Principal Paydown: $2,806 Total Gain: $8,674 ROI: 53.59%.Year 4 Analysis Cash Flow: $9 Home Appreciation: $6,367 Principal Paydown: $3,009 Total Gain: $9,386 ROI: 57.99%.Based on these numbers, you’d have negative cash flow for the first three years and only break even in Year 4, assuming a 2.5% annual rent increase.Adjusted Scenario see second picture: Landlord Covers Gas and WaterIn the second scenario, I assumed the landlord would pay for gas and water at $300/month while maintaining the same 2% home appreciation rate.

Even large and small businesses with intangible residual services like TV, internet, security, pest control or the local contractor with remodels in process could fall behind on payments revenue contract. 

But if those payments feel like dead weight, Dave Ramsey’s “debt-free” mindset could be worth revisiting.Here’s a quick story to illustrate.

If this is correct, how much are you cash flowing each month after you pay your operating expenses and make your loan payment?

As a new fix and flip investor lenders will typically want to see 20% down payment and will be able to fund 20% of the rehab budget (80% LTC). 

Because the payment is coming from the tenant, and not the surety bond provider, claims are always processed without a fight.If you are interested in considering a surety bond program, I recommend Obligo.

I think many people tend to think about the monthly payment number and not about the interest rate.

If you are able to sell I'd say sell, if it's not looking like that's going to happen then try to get it on a long term loan with renters so you can save on your monthly payment, then get the equity back out and move onto something else!