Usually its because there is a lot of debt risk. when interest rates went up a year or so ago I lost over 300k in sydication projects I was a part of because I didn't understand this concept.

Well, what would be happening is that your buyer would be buying your house subject to the existing note, since you can't legally sell the property without paying off that note or transferring the debt to the new buyer.

You are competing against other owners who have a much lower basis and/or debt cost to cover. 

This was last year and shows the balance to be about $8000 What kind of debt is it? 

If you focus on long-term holding for five to seven years, then using the above scenario on the house you are looking at, you will make significantly more on appreciation and debt service than cash flow. 

•Beyond that, flood insurance adds to a buyer’s monthly expenses, which can affect their debt-to-income (DTI) ratio and reduce their overall purchasing power.

Deduct NEW property taxes after you buyDeduct home insurance costsDeduct maintenance percentage, typically 10%Deduct vacancy+tenant nonperformance percentage(we recommend 5% for Class A, 10% Class B, 20% Class C, good luck with Class D)Deduct whatever dollar/percentage of cashflow you wantNow, what you have left over is the amount for debt service.Enter it into a mortgage calculator, with current interest rate for an investment property, to determine your maximum mortgage amount.Divide the mortgage amount by either 75% or 80%, depending on the required down payment percentage - this is your tentative price to offer.If the property needs repairs, you'll want to deduct 110%-120% of the estimated repairs from this amount.Be sure to also research the ARV and make sure it's 10-20% higher than your tentative purchase price.As long as the ARV checks out, this is the purchase price to offer.It is probably significantly below the asking price.

Quote from @Alec Barnes: Quote from @Drew Sygit: @Alec Barnes we use Debt-To-Income Ratio (DTI) instead of income = 3x rent.Reason?

Let’s break this down because there’s a lot to unpack here.The real question is, how well is that debt working for you?

Just a follow up question, were you utilizing debt to invest, I have always been taught since a young age to try and not utilize debt (I come from a family of stock market investors, traditional business owners) where debt is not utilized as frequently which I obviously understand debt can be a very powerful tool and utilized in a great way its just something I want to avoid with my investments to an extent any suggestions for investing without debt or as little as possible.