Kudos to you for doing something to create a secondary income stream. there are 5 income streams in RE rentals, possibly six if you do things a certain way.The reality here is your model (buy box) is suffering from too high an entry and too high a cost of capital.

(Especially a 2-4 unit.)Do they have friends/relatives/co-workers that would rent rooms from them if they bought a property to show more income?

I am in the Tampa Florida area and we in dire need of more LTRs for incoming residents. 

Lastly, having a reserve fund is key to offsetting unexpected costs, especially with reduced cash flow from the loan repayments.Hope this helps, and congrats on tackling creative financing!

Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

I’d dig into this a bit more.Another assumption that stood out to me as potentially problematic is the 6% income growth and only 3% expense growth.

Without the high leverage you reduce the top source of return in CA RE which is achieve via the appreciation on a high leverage property.  

When it comes to analyzing properties, I’ve developed a specific checklist to make sure the home fits both resident needs and operational goals:Square Footage: Ideally, at least 2,000 sq. ft. to ensure enough living space for residents and staff.No Stairs or Pools: It reduces liability and keeps the home accessible for everyone (this is just my preference).Corner Lots: I love corner lots because they often provide extra parking and outdoor space—both of which are critical for families and visitors.

This reduces exit options and affects the value. 10) Small number of small units is the most expensive residential development there is.

And then your REI income matches your W2 income the first time etcTo your question: equity is the name of the game.