The FinancialsPurchased our "starter home" brand new in 2010 for $166,490Zestimate is currently at $281,510Mortgage Outstanding Principal balance is $137,331.69Monthly Payment (PITI) is $1,159.24Rent Zestimate is $1,625 /moIn case it's relevant, our budget for a new home is $450K and we have 25% saved for deposit.

The point I am trying to make is that leverage can increase your returns but as you pay back principal you're leverage decreases.

If you lose $250 cash per month, but pay off $2K in mortgage principal, that's a good deal for you overall, as long as you can handle the cash outflow out of pocket long term.

What I can do is pay the principal down earlier. 

That being said, if I’m a licensed agent, but not working for any principal broker.

.$34M purchase7% preferred returnCash and Cash - 8.5% over 5 yearsWhen deal sold, the principal is returned and 70% of proceeds basedEquity multiple 1.94"Over 5 years, you're basically doubling investment."15.9% IRRUsing that -- and some if the info seems contradictory to me -- how do you simplify to, "If I invested $100K here, assuming their numbers are true, I could expect to earn $XXXX each year and $XXXX total after 5 years"?

The tenant doesn't own anything until the option is exercised and they actually buy the property.Owner financing is the owner acting as the bank with a promissory note with the terms of payment (principal amount, interest rate, number of months).

@Chaim Rosenstadt when i compute your numbers above (assuming $440 mortgage includes principal & interest) I get $333 in cash flow. 

And if you are taking a loan, then breaking even each year is actually a win for you because your principal balance is being paid by someone else.   

Reserves are the amount of principal, interest, taxes, and insurance, plus any HOA that are needed.