@Michael HoranI can confirm for you without knowing anything further that there is zero chance that a property like that will cash flow $508 a month. 

We still adhere to the state laws around deadlines to return security deposits and what we have to do to close out a deposit, but if it got messy it could get messy.We have also been told by our sister company in Denver that this does not work with anyone receiveing a housing voucher/subsidy, which we have also been unable to confirm in our local market including directly with our local housing authority.

Why buy a $900K home to only clear $500 a month when you can buy a $250K duplex that offers the same cash flow.The price to cash flow ratio has to make sense if you want to maximize your capital and spread your liquid reserves for down payments.

-Landlord reserves all rights to reject any or all applicants that does not meet the selection criteria set by the landlord.

The easiest way to think of the draws is like a reimbursement where after you complete work on the property, the lender sends out an inspector to confirm that work has been completed then gives you funds according to what has been done.You should be using a lender for the purchase as well since purchase and rehabs offer the highest % of purchase price.

@Paul Azad, regarding your example, I would confirm if the projected 14% return is net of all fees and carry or gross.  

@Evan Miller Thanks for confirming.

Then you probably need $100-$150k in reserves and another $50-$100k for turnover/upgrades if you plan to raise rents.

You want to bank reserves there to see the future cap ex because if you don't, you get another property and then two furnaces go out in the winter at each and you need 20k and now they both cashflow nothing.Your asset will appreciate and you can value add to rent add by making smart decisions on upgrading tenants.

In your case, the finance charges you are currently paying will likely be less than any construction debt you originate so I would recommend first confirming with the existing lender how to release the developable parcel and then obtain all of your approvals before proceeding.