To figure your expenses in this situation, you would apportion the expenses based on the ration of rental use and personal use.

If you pay a seller's portion of that pro-rationing, then that amount becomes part of your basis.

Nathan Emmert I like reading your posts because I like your your rationality and bottom line thinking when it comes to numbers.

The issue of short-sales & the rationalizations that agents have been doing with them have twisted a weak argument into a cult-like mantra " we don't work for the banks".

Really no different than tax pro-rations, if you look at it that way.

If you only need 800 sq ft and can rent an apartment for 800 a month then it might be better for you than buying a 2,000 sq ft house that cost you much more in maintenance and taxes each year.If you bought your first house to live in that might affect your debt ration to qualify for an income property.Then if you have to wait a few years interest rates can be higher and prices could have risen more.

She's talked to Wells Fargo.. credit score is in the upper 600's, excellent debt to income rations.. but apparently she did a short sale a year ago as she had to re-locate, etc.

While you might make an exception to go lower on an occasional deal you can't make it a habit to settle and just get comfortable by not having to negotiate your deals harder.Thanks for the informative reply and your rationalization.

The most expensive word in the RE Investor's vocabulary is "rationalization".  

It used to be, way back before the year 2000, that if you had a house CF over $50/month you would happy, and rationalized it to be a good investment because of depreciation and appreciation.