We were fortunate enough not to run into too many unexpected expenses during the rehab, so the projections with the added cushion was more than enough to cover the work (even with having to buy 2 brand new water heaters a couple weeks apart).As far as management goes our project manager is an extension of our property management company, so they get a % for managing the work and are equally incentivized to make sure the work is done right as they will also be managing it long term.

I have used 2.5X rent to income on these C class properties to obtain applicant interest and have not gotten burned by it yet (I suspect I will eventually because these tenants simply do not have much margin to deal with the unexpected).The people who rent the lower cost units are used to living on lower expenses. 

If it's something like divorce or sudden, large, unexpected medical debt, that's one thing.

This was unexpected and I did not have processes in place to prepare myself. 

It always seems like the first few months are fraught with problem guests and unexpected issues.

Plus if times get tough or unexpected expenses pop up, you can pay interest only on the HELOC.

I'm running into some unexpected terms and rates trying to finance my first rental property through banks and want to get opinions and input from other here.

The advantage is that you have the flexibility to lower your payments if something unexpected comes along.

This way, if there was an unexpected spike in vacancy we could toggle back a bit to keep revenues from dipping.

How are most cash flows split (50/50) and what about unexpected expenses.