I wanted to use the 6% incentive to pay all of the closing costs and prepaids (about $5400) and use the remaining $3-4K towards the 5% down required which would leave me only about 2-3K out of pocket.

But I'm curious so I've finally decided to post.When you buy a property and get a regular loan, I understand the accounting entries for that (debit to property/land assets and credit to the note payable liability, among other things).But say you buy a property "subject to".

VA mortgages are zero down and you should ask the seller to pay your closing costs and pre-paids. 

You could also just get like a prepaid legal service or something. 

Unnecessary but highly desirable would be the ability to automate monthly transactions for items such as prepaid insurance, prepaid taxes, depreciation expenses.Thanks all for your help!

They will make sure all the documents have been executed by both buyer and seller, the loan and HUD statements are correct, walk you through signing all the paperwork and draw up the debit/credits for both the buyer and seller's financials and handle the money part of the transaction. 

The security deposits and any prepaid rents would be transferred to you at closing.  

yes you can change later, but pre-paids are going to hurt at closing.

You need to find out what those prepaid items are.

I can see how late fees could be problematic if I debited the tenant's account.