So it boils down to confidence in my analysis and domain knowledge.7) Rationally, math is math and unless I made a horrible mistake in one or more assumptions, the numbers do not lie. 8) In my current analysis/screening of properties/deals I am looking for a) positive cashflow;b) operating expense ratio <50%; c) debt coverage >=1.5;d) PE <3;e) Cash-on-Cash of 10-12+;f) BER <=75 (80 at the max)g) I tend not to be driven terribly by the CAP rate if the cash-on-cash is good - in the local market it is extremely rare to find a multi-unit with a CAP >7.5 to 9In our analysis we use an opportunity cost of 8%; a maintenance & CAPX set aside of 10%; and assume a vacancy rate of 8.33% (1 month in 12) ... we try to be conservative9) I do realise that while the above ratios have been fine for us, they may not be sufficient for a potential private money financier.

My feeling is that if we want to do good things for people, there can always be found a convenient rationalization to hang the improvement on!

Unless they get a lawyer and try to file a paupers affidavit you will win if you have all your evidence and explain yourself rationally and calmly.Meanwhile do what I did and focus on the units that are vacant and get them ready so as soon as the other ones are out you can fix up their unit.

It’s easy to rationalize a purchase by saying that you can’t buy for less in this area.

It is hard to be rational when you are emotional. 

To a rational person, if you were paying mortgages of 15%, of course I can pay 7% with ease particularly if I had the properties for over 10 years, and rents went up considerably.But not if you talk to a loan processor.I submitted two mortgages to refi, no cash out, same amounts as before, on the same day.

Another approach you can use to rationalize value would be to reverse engineer the cap rates of similar properties that have sold in the last 3-6 months.

If you do not qualify for the first-time homebuyer, you would likely still be eligible for a high-ration mortgage and 10% downpayment,In both of the above instances, you will be required to live in the home.  

If you use those proceeds as a down, you'll need to qualify for the purchase money loan with that loan taken included in your rations.

I know at first my girlfriend couldn't rationalize all the work for just "$200 per month".My girlfriend wasn't initially on board either, but her ultimate dream is to someday own an art studio where she prints and sells artwork.