This is an overly simplified example where all of the houses are the exact same (this almost never happens in the real world), but the general principle holds true regardless.Reading Sales Data and Making AdjustmentsFirst of all, for the purposes of personal due diligence, don't try making all kinds of adjustments to your comparable sales.

so far sent the Interest-Only payment of low $900s Since you're not making any contribution to principle and you say there's only "modest" appreciation, I hope the current rental and your residence when it becomes a rental each throw off lots of free cash.with the modest appreciation in the regionIf appreciation is only modest (I live in TX so I understand that) you need to be very careful with the use of leverage.

If you can't answer the first and last questions OBJECTIVELY, I think these guys will have your pants down before you even know your belt has been unbuckled!

I was amazed that for the past year, I'd been thinking like the book and the principles.

We specialized in identifying large real estate projects in israel,Hotels, motels, resorts and malls are our main objective !

After that I'll accept additional principle and they generally balloon in 5-10 years.I'm not sure where most people get their rehabbing funds.

I think what people are trying to say is that you're only paying interest, and not putting a dent in the principle at all.

If you want a specific grace period then put it in the contract.The other side should not object unless they want to tie you down for ever.Note that if there is no end period noted I would suspect that the other side is naive at best.

I don't think the question was about the investment as much as the analysis process.When I run a projection like this, I like to make it kind of a "what to expect in the first year" scenario.I also include projected tax benefits, equity buildup (amount of principle paid) and somtime include some estimation of appreciation.So, using your numbers (and a couple of my own assumptions), this is what I get:Your Assumptions:Purchase Price $250,000.00Down Payment $50,000.00Loan Term 30 yearsLoan Rate 7.80%Yearly Income $33,495.00Yearly Expenses $11,412.00My assumptions:Property Appreciation3.00%Buyer's Tax Bracket30.00%Depreciation- Land 20.00% Building 65.00% over 27.5 years Personal Property 15.00% over 5 years1st Year Benefits:Cash Flow$33,495.00Income-$11,412.00Expenses=$22,083.00Net Operating Income $1,439.74Monthly Payment*12Months=$17,276.89Debt Service $22,083.00Net Operating Income-$17,276.89Debt Service=$4,806.11Cash FlowTax Shelter$22,083.00Net Operating Income-$5,909.09Building Depreciation-$7,500.00Personal Property Depreciation-$15,538.73Interest Paid$-6,864.82Taxable Income / Loss $-6,864.82Taxable Income / Loss*30.00%Tax Bracket $2,059.45Total Tax Effect (You save this much in the first year on your taxes...)EquityIn the first year's payemts, $1,738.16 of principle will be paid.AppreciationA property worth $250,000.00 whose value increases by 3.00% per yer will increase in value by $7,500.00 in the first year.Total BenefitCash Flow + Shelter + Equity Increase + Appreciation = $16,103.7132.21% return on down paymentIf you don't like to include Appreciation, then you getCash Flow + Shelter + Equity Increase = $8,603.7117.21% return on down payment

Section 121 says that the first $250K ($500K married filing jointly) of gain is TAX FREE if it's been your principle residence for 24 of the previous 60 months.