And after factoring in op expenses, allowances and debt reserve, a 5 cap investment will most likely turn into a money losing proposition.

And after factoring in op expenses, allowances and debt reserve, a 5 cap investment will most likely turn into a money losing proposition.

He currently has most of his money in 1 - 2% bonds - so this would be a much better proposition. 

The value proposition of this cash value leverage strategy is that you can literally put your money to work in two places at one time.

As for specifics on your proposition about low-income and small towns you will likely hit some challenges.  

I am not saying Newburgh is hopeless, I am propositioning opening an advertising agency there right now that utilizes urban renewal as a community responsibility action, but those are two wildly different markets.  

There's a ton of posts here on these types of homes - they're generally referred to as "$35,000 Pigs".The ideal situation is if you can buy one for $20 - $30k, put another $20k into it, and have an ARV of $75,000+ and be able to rent it for $725+ per month.It's a risky proposition and I'll explain why.....On paper they look great because you're dealing with percentages.  

I think I didn't notice that mistake because most of the deals I've analyzed recently don't have a ton of built-in equity or value add proposition (which is the root of my problem), but it's definitely a great catch.  

Forrest Wilson This is an interesting proposition.

Try to get 30-50k out to play with and id look for eirher single or mutli family value add propositions in which you could get your money in to either flip or refi after 6-12 months to get your $ back out.