Don't forget that even though the cash flow on paper is proformed at negative, that is implying vacancy of which you will have none for now because it's rented.   

Calling it a deposit, in some jurisdictions, inherently implies refundability.

Understanding something usually implies you've actually done that thing.I too used to think I was a genius and found out experience is the cruelest and best teacher.

My name is Matthew Michels i'm a Firefighter from Hollywood FL and my wife Danielle is a Mom and personal Trainer.

Are you implying the notes would be capital gains same as stocks, bonds, etc?

As house I am house hacking, I tried to make conservative estimates and I wouldn't mind living in the third unit paying a couple hundred bucks a month which the numbers below implies.

In these post Dodd Frank days everyone recommends doing a separate option contract to the lease agreement and having neither document reverence the other so as to not imply an installment sale.

And we would in turn have no equity in the home to borrow against.Are you implying some type of gifted equity situation?

I'm stoked to start learning more as everything related to renting that property unfolds.Here's my background:I make about $45,000 a year, sometimes more (I'm a personal trainer in Los Angeles) and my goal is to buy ten properties minimum over ten years.

This implies a large downpayment for future investments since I won't be able to use any owner-occupied loans and that's exactly what I am trying to avoid in the beginning of my career as an investor.