Here are my numbers on my suggestions:1st home: rental income $7,900 per year (net rental income) -  $1,066(federal tax of 25% on $4,264 since $3,636 is tax deductible due to depreciation [$100,000/27.5 years]) - $3,000 (new home equity loan yearly payment at 30 year 4% rate) =$3,834; cash-on-cash return is $3,834/$25,000(home equity loan cashed out 75% of the value of the house to pay off the 2nd house) = 15.3%.2nd home: paid offNet income = $3,834 per year to put in stock market at average annual return of 9-11%, which compounds annually.Does this make sense to the experts on this forum?  

I dont know how far you looked into the homes but the ones that you are finding to be too cheap may just have a bigger problem than you thought. for example just the other day i talked to an owner that was selling his property for 40 but its appraised value was at 55 a few months ago. well i walked into the house and it has a huge foundation problem such as bowing in the floors and stuff.

I can show you how an Option ARM makes you MORE money than an interest only or amortized once you figure the compounding interest of investing it.

@Bill Jacobsen is there an online calculator to figure that 8% compounded out?

The year before, I only put away $5k, but used all funds to re-invest in the flip biz so that I could "compound" my growth. last year, I made a commitment to invest in some passive investments like notes and I did and am thankful for it.

The ability to access the equity, and purchase more, has created a compound effect that has surpassed other markets.

If you never add a penny after that (which you should) and receive 6% annual returns compounded into that Roth IRA, it will be $1.12 Million of tax-free money when you are age 60.  

I'm not talking about a bowing basement wall. 

Now, have politicians consistently damaged things, and it's compounded over the decades to the train-wreck today is, sure as heck yeah.

This was a high end compound.