Qualification is based on the front ration, housing expense and the back ratio housing with all other obligations outstanding with 6 months or more remaining to be paid. :)

I'm just trying to get in the game without dealing with guru hype.The issue is that you are thinking rationally and applying that to banks.No bank will want that loan.

Point is, if lenders were pushing the issue on enough of these cases, then someone less rational than you would likely have litigated it, at least to try to get an injunction to stop the foreclosure at the district court level.

Depreciation is also an "after the fact" recognition of the expense, when you SHOULD be reserving for it in advance by dividing the cost of a new roof or mechanicals by 15 years to get an annual "charge" that you are setting aside (or more if the items are already fairly old when you buy).Not saying those you know are fudging the numbers, but just be aware that there is an understatement bias on the part of the typical investor.All that said, you have <1% prop taxes and are in a high rent range in a generally good area with good tenants, so based on this I think I could rationalize 45% for vacancies/expenses, or perhaps just 30% if doing the management AND leasing.

The allure of vacation rental property seems to surpass the mundane of just regular old rental property not at a great location.The mystic of resort property is so much stronger that people who would not buy rental property end up buying vacation property and rationalize the expenditure by saying that they'll get to vacation at their own place AND get renters to essentially pay for their vacations.

She's afraid that my debt/income ration might not go through with the added HELOCI make 50k a year with no other debt (house and cars are paid off).

Let them know you have a lockout scheduled but that the tenant appears to be unable to think or act rationally, and does not appear to have friends or family to assist. 

Sounds rational.

Of course not but they could and they are as rational as any prediction the market will tank

The reason I am keeping a rental despite my preference for flipping is due to the fact that by having some passive income flowing in, it's easier for me to keep a rational head when identifying deals since i am depending on flipping and doing deals as a full time job and sole source of income.Without some source of income, I get antsy when I haven't flipped or done or deal after a long period, increasing my chances of making a mistake.