so as long as you stick to your guns you'll have an extra $500 a month of money by moving into this home and keeping it occupied. that will easily take care of monthly maintenence. i do suggest putting a full 3-6 months of rent into a savings account just in case everyone all of the sudden hates you and leaves. that gives you a cushion to rerent the rooms, sell, or move out and turn it into a girls house. save up that $500 a month for a year and you'll have that ready. then after that you will still need to put all or some of it away for repairs. if you go high and put 5% of the value away then you'll cover your bases. short of it is you may not realize and CASH flow but you will OWN the home which will leverage yourself and your credit. if your serious about buying more homes to rent out try and find a way to make extra money somewhere to put down 30% or so for a convential loan (i am just assuming that you need a much larger down payment for a rental property AND 3-6 months of mortgage payments in the bank in order to qualify...so essentially that savings i mentioned in the first place is going to help you "seem richer" to the banks also).

Whatever expenses you calculate, I would add some cushion for these expenditures. 

*Keep in the back of your mind while reading all this that the Fed has ALWAYS lowered rates at least 300bp (3%) in every past recession to cushion the fallout.

What a great cushion!

Two times rent doesn't sound like applicant has a financial cushion, especially in light of collection status.

I haven't had an inspection yet, and this would be negotiable with the seller, but I'm assuming to pay for it all myself to be conservative in my numbers)Total cash in the property: $20,000Estimated rental income: $800/mo (it could possibly be higher)Vacancy: $64.00 (8%)Repairs: $40.00 (5%)CapEx: $80.00 (10%)Property management: I will be managing on my ownElectricity: Tenant paysWater: Tenant paysGas: Tenant paysSewer: Tenant paysTrash: Tenant paysLawn: Tenant paysInsurance: $50.00Taxes: $91.33Misc: $50.00Total operating expenses: $375.33NOI: $5,096P&I: $239.57Monthly cash flow: $185.09Cash on cash ROI: 11.11%I feel like I have enough of a cushion in my numbers to imagine my ROI will be higher than that, but if the worst case scenario has me getting an ROI of >10%, I'd feel pretty good about it.

Total ROI=(net proceeds from sale - cash invested)/cash investedExample: House: 725kUpfront: 3.5% down + closing + PMI (60k)Cash Flow: -18k/YrTotal Yearly Out Pocket: -540kSale: 1.3mm (2% annual growth over 30 yrs)Net Proceeds: 1.2mmCash Invested: 700k = 600k (60+540k) + 100k (cushion)ROI = (1.2mm - 700k)/700k = 71% Annualized ROI = <2.5% With that annual return couldn't I try to invest in the stock market and achieve an annualized 2% return.

With this first duplex I'm going to do the work myself to help give me a safey cushion in the budget, I'm pretty handy, and I have friends and family that are contractors.

In some ways as long as you buy right to account for that cost it actually gives you a bigger cushion.

I want to have a good number in my head for when the appraiser comes by, as I want as large of a HELOC as I can get to cushion me for my real estate investing.