However, the after the 5 yrs it is adjustable with no cap. 

Likewise, your annual or quarterly or whatever property tax payment is expensed when paid, if you're on the the cash basis (which most people are) but you've already counted that in the reserves.Here is what your accounting software probably shows in the month that you paid the property taxes.Rental Income - $1000.00Expenses:Insurance:               30.00Property Mgmt:   100.00Mortgage Int:        350.00Property Tax:        700.00   Total Expenses:    1180.00Net Loss                   180.00So what you want to do is dump this report into excel in order to reconcile it back to your cash flow.Start with your Net Loss Number and then make adjustments until you reach your cash flow:Net Loss:        180.00Add Expenses Paid from Reserves:Property Taxes:  700.00Subtract Other Cash PaymentsMortgage Principal: $150.00Amount transferred to reserves:  $80.00Net Cash Flow:  $290.00Cash Flow is a completely separate calculation than Profit and Loss. 

Your grandfathers money would probably be better off moved out of real estate and into a more passive investment vehicle.He could refinance to pull equity or, based on possible adjustment to the market, he could sell.

However when I deducted taxes and adjusted for inflation they actually lost money....WTFI think there are definitely properties that will barely appreciate...but I think neighborhoods that people want to live in will at least keep up with the cost of inflation of construction materials...at least. 

This is area specific, but for me it is attorney fees, transfer tax, tax adjustments (county, school and village) title fee and title insurance on the buy side.On the close side it is attorney, transfer tax, tax adjustments, and realtor fees.My latest house ($120k purchase) cost about $8500 to buy and will cost around $11-12k to sell.

It has been a 3 year journey  to get where I am today with lots of turns and twists but if one   has a plan and keeps evaluating it adjusting  visiting and making improvements   you get where you want to be  .

Just as an example, where rents adjust with the market, tenants experience the rise incrementally and are better acclimated with the market.

For leases, use your standard lease and just adjust the parts that apply so it works for a garage storage unit.

The type of debt and the ratio to asset value is key to me.If your debt is hard money, private, commercial with balloons, calls and rate adjusts? 

I have 2 choices: 1) Pony up the $3,000 out of MY pocket to get the job done (I don't need to bring this money to closing, but I do need to demonstrate to the HML lender that I have the funds to make it happen), or 2) Simply adjust my budget down by $3k.Let's say that the lender charges the following:3% origination fee ($65K *.03) = $1,950Appraisal Fee - $500 Pro-rated Interest (one month) - $380 Title Search / Title Insurance - $175 Pro-rated Property Ins. - $100 Pro-Rated Taxes - $400 Settlement Fees - $400 Recording Fees - $100 Wholesale fees (if applicable) - $500 Since "No Money Down" is not an option, I'll will need to pay these fees up-front in order to get my $65,000.