We haven't talked about the details yet, but I am under the assumption we would both like to do this extension outside of VRBO.He stated that if we are to extend his stay, he would prefer to pay us at the beginning of a month, for each month he will stay going forward, instead of paying one lump sum like he did on VRBO.

However, we did brainstorm the following offer scenario:Owner-financed at $140k @ 5% APR with 3% down, plus $10k rehab (so ~$15k out of pocket) based on the assumption (and negotiating angle) that it would have to be switched back to a 3-family (and therefore we only counted 3-family rents).

As to your client’s deal, if his forecast is predicting a 50% return over two years it’s very likely that either something was missed or the assumptions are overly aggressive.

My point, if the goal is big enough sharing a house with tenants isn't really that big of a deal as long as you have a few basic assumptions and are willing to be patient.Also fantastic advice from@Robert Ellis on finding a lender and getting pre-approved as quickly as possible. 

. :)Usually, the bigger the deal, the more sophisticated the operator is, and thus better records.So if you're doing more smaller deals, you may have to settle for less, but you can try and get creative during due diligence to verify your underwriting assumptions, like knocking on those same doors and getting a signed estoppel. :)James

Many here may be familiar with appraised value but the bank may have asked an appraiser to develop a market price with a few assumptions.

I think your assumption of 4.5-4.90 is a fair assumption. 

Let's make a favorable assumption, split the difference, and round up to a nice number: $3,200/month. 

I made some assumptions above but without all of the information I would be speculating as to what makes the most sense for your circumstances.

@Norman WaltonYou asked a good question but there is a base underlying assumption that may not be true.