Need to have great reserves while you wait for the market to turn. 

@Adrian LemusThanks for the confirmation, of course depending on finishes cost could be higher. 

It can be a great opportunity to run an STR for those three years that he says he's going to be there and build up a bit of a stronger reserve fund for when he converts to medium or long term rental when he moves out. 

important that there is often a distinction (however vague) between first time "investor" and first time "homebuyer" - always have to confirm if/what the difference in program eligibility is

Thanks for confirming that. 

The type of properties we tend to buy in Milwaukee are just over break even in my book, but you could easily call them negative cash flow if you start adding percentages for reserves.

Do you have anyone you use for repairs, this will be a consideration done the road.Second, you will want to factor in reserves for the unexpected. 

The "approval" is just them confirming that you meet the Freddie standards and providing confirmation you are able to proceed with the transfer.

And given age and desire to "retire" with the help of these rentals, I would budget much more in reserves than what most people on these forums do.  

AND you must maintain adequate reserves to take care of the disasters that may happen.So my advice- build your equity.Most of my clients fall into the first group above.