You find a distressed homeowner who is 6 months behind in his mortgage, and owes $100k in principal and another $10k in interest and late fees - so the payoff on the note is $110k.

Free cash of $1,300/month (the $1,150 you are currently paying in mortgage and utilities plus $150 cash) could then be used to pay towards principal on SL and car not, accelerating debt pay down.78% RR on 20k minus 5% avg SL and Car interest and 4% mortgage interest = IRR of 69%I think (assuming I'm looking at this the right way), using your 20K in cash soldiers to generate additional income is more advantageous than using it to pay down debt.

The principal reasons are:Sourcing off market properties is more work.  

After refi, principal paydown is our friend and helps mitigate any potential future decrease in value.  

I'm basically a 'principal' in the deal, meaning our relationship is adversarial and I am negotiating on behalf of my own interests, so just because I have a real estate license nothing like fiduciary responsibility applies. 

"One- to four-unit principal residences, one-unit second homes, or one-unit investor properties including units in condos, co-ops, and PUDs.

My clients who have built significant equity in their principal residences,  qualify to refi up to 80% and use that funds as down payment for 1 or 2 properties.

The mortgage has a small balance of $22,000 with a $232 of monthly payments which includes principal, property tax, and fire/water insurance.

We always need current and active agreements (signature or something in writing from the principal) from both side to change anything.Also, the tenant relocation escrow if completely different and separate from the purchase escrow.

So, unless I'm mistaken, NOI is before you pay principal and interest.