Think of it as there are two phases:a) build wealthb) enjoy wealthThe idea with phase 1 is to build your asset base quickly using a method you understand, are good at, and can leverage effectively, and then when you are ready for phase 2 you make a decision whether you want the income to be more hands-off and adjust your asset allocation accordingly.What Vikram is saying is that during the first phase, if renovating is your strength then focus on that is you'll get to phase 2 quicker and with less risk of a major set-back.

It will properly allocate taxes, utilities, etc. to rental portion and the remaining taxes will go to schedule A

I also agree that it's ok for a second lender to demand more than what they were allocated by the first, but what I definitely don't agree with is the lender asking for money to be paid and not documented.

It may just be that I have a relatively small amount of cash allocated to real estate (a few hundred thousand), so generating these returns aren't too difficult.As you pointed out above, the larger your portfolio grows, the more difficult it becomes to maintain these types of returns, and I certainly don't expect it to last more than a couple more years before we have to figure out additional strategies and allocations.

As you get your track record audited and formalized, you may be able to attract private investors to allocate capital to your real estate "fund" this will allow you increased access to financing.

Yep, I see that, and on the note book I'm using the space bar doesn't always work for me, you can tell from my other posts.I see what you're talking about now, sorry, I misread it....I really hesitate in getting into "creative" financing issues here as some may try to use them for "ill purposes"....interest can accrue, it does not need to be paid, it can be made a part of pincipal and then accrue interest, on an annual allocation to reduce the componding effects.

and of course some part of the rent is an allocation that goes toward paying that water/sewer bill.That same duplex has two gas meters, so they pay their own heat, cooking and hot water.

This is really partially an asset allocation question and the answer depends on your age, goals, tolerance for risk, etc.

A RUBBS system would allow you to accurately allocate utility expenses directly to individual units.

Read about the "50% rule" in the rental property forum, and only buy a property that cash flows when you allocate 50% of the gross rents to expenses.