Quote from @Erick Pena: A "good" rental property is one that covers all expenses (mortgage, taxes, insurance, maintenance, property management fees, and any other costs) and still leave a surplus (commonly referred to as cash flow).Calculate cash flow as: Cash Flow = Rental Income − Operating Expenses − DebtThere's much more to it, but that's the basic idea.

Type Line Item Fee Fixed Fee Collected Rents 10% of All Collected Rents New Tenant Search & Onboarding $600 Variable Fees Business Hour Service Calls $90/hour + Materials Cost + Tax After Hour Service Calls $120/hour + Materials Cost + Tax 3rd Party Coordination HVAC Cleaning & InspectionGutter CleaningSpring/Fall Exterior CleanupSeasonal Mowing & Weed TrimmingSeasonal Snow PlowingGeneral Contractor Negotiated Vendor Cost + 10% Oversight Fee  

If you’re interested in investing in real estate, you can consider doing so with a Self-Directed IRA to defer taxes on capital gains until you actually withdraw the funds from your IRA.

@Brett RiemensniderYou don't need to provide anything to your tenants tax-wise.

Can easily get fee worksheets and run credit/DU 3.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

We both have good credit but my lender made it seem like there was no getting around putting less than 25% down on an investment property.

im in Orange County CA and there is a huge market here for room by room rentals here. i've been doing this for quite some time (over a decade now), and it certainly has its pro's and cons. my advice if you go about this is make sure you do proper vetting before moving someone in... not only for financials/ credit-worthiness, but also for temperament and expectations in a co-living space. we ask a lot of questions like "how do you handle conflict?"

My tax professional is stating that I would need an appraisal to show the lot/structure are valued at $400k if I try to claim $200k as a donation.

You also don't have to pay state tax on income.