No pre-payment penalties.If option #2, additional return of 1.25% paid off the final sale price of the home.Late payment occurs 30 days of 12 month due date; 1.5%/month accruing per day from the original due date.I will be on the Deed of Trust in first position.Is there anything missing that I'm not seeing?

Meaning that you start accruing daily interest the day you make a new purchase.

A property insurer's cost are back loaded, accruing after the house is damaged and the loss paid.Title insurance and a title search are not different services. 

All the while you are accruing negative cash flow with the expectation that things get better.

@Chris SeveneyThe water department just said it "posted to the account and there is nothing they could do", so the benefit would accrue to the new owner of the property, and that's that, "that's our policy".

I have a tenant who knows LOOK call me if any issues accrue but DO KNOW - LIKE YOURSELF I DO SLEEP SOMETIMES... 

@Adam FrantzTaxable income from rental properties = Rental income less operating expenses less depreciation less mortgage interest.setting up reserve accounts do not impact taxable income unless you accrue interest income on the reserve funds.

Originally my goal was to buy and hold (and still what I prefer to do) but I also know that the properties I have, have accrued a lot of equity. 

Form 1116 is filed to claim the foreign tax credit if you are an individual, estate, or trust, and you paid or accrued certain foreign taxes to a foreign country. 

So I'll link the law below for anyone who isn't in MD but pretty much you're required to keep security deposits in an interest accruing account at 1.5%, then interest is returned with the initial deposit to the tenant (if I'm interpreting this correctly).