Want PB's opinion on this analysis:65K Property SFR (1/2 duplex- own one side)= 2BR/2BA (need minor repairs like repainting, backyard trim, little upgrades= HVAC and Roof is fairly new, good for another 10 years)20% down ($13K) with @4.5% interest so $52K loan amount$3,031 in closing costs$1,240 in prepaid interests for 30 days and homeowner's insurance and property taxes escrow for 6 monthsTotal cash on close-out: $17, 271Income:$675-725 rent (market range for this property) so $700 average market rent-----Breakdown per month expensesP&I= $263.48/monthTaxes&Insurance= $156/monthTOTAL PITI: $418.48/month-----Vacancy (8.33%)= $61/monthRepairs (10%)= $70/month (if rent collected is $700/month)CapEX (8%)= $56/month (if rent collected is $700/month)Property Management (11%)= 74.17/monthTOTAL misc expenses: $261.17----Water/Sewer/Garbage/Electricity= Tenant paysHOA= NoneLawn care= TenantTOTAL PITI + Misc expenses= $679.65Average Market rent= $700Cash flow per Month: $20.35Cash flow isn't that great, a lousy $20, is it worth the risk?

Make sure your friend declares the 2% as prepaid taxes.  

Mike Wright love the prepaid/addressed envelopes

Now, if you have a score of 740 the reserve can requirement can be cut down to $18000 plus $15000 and any closing costs, prepaids you are paying.  

Seems like you would have to buy a lot of these and I dont know whether its practicalI do this on the side to accumulate massive amounts of airline miles.That said, it's no easy process, and there is about a 1.5% transactional cost, and then you need to find a lawyer/title company that will accept all these prepaid cash cards since the maximum balance amount is $500  LOL

Taxes/prepaid insurance: $500So my estimate would be around $3500-$6000At closing everybody's got their dirty hands in your pockets.

For any leases that expired prior to closing, the prepaid last month's rent would go to the seller.

Note that this amount includes the upfront mortgage insurance premium (big number), prepaid interest, insurance, a fee for buying into the local water cooperative, etc.  

My lender told me if I close in October rather than on 9/29, then I won't have a mortgage payment on the new home until Dec. 1....Downside, I'll have to pay many more days of prepaid interest at $25/day.

I has be rare that any tenant stayed less than a year.Other point;  NEVER take prepaid rents into the future - - to me this says the tenant him/herself is doubtful of there prospect for continued employment - - but that's just me.