maintenance costs will accumulate for about 50% of your gross rents. take for instance having a place rent for $700 a month with a $500 mortgage payment plus $100 in insurnace and taxes. many newbies will think that they are pocketing $100 a month in cash flow. now, lets say that u need a new roof at the tune of $5,000 and a pipe breaks for $800 and u have a tenant trash the place and stiff u 1 months rent ($700 for the rent, $1500 to get the place back). all of those 'items' need to be paid for by YOU. and in order to pay for them, you will ofcourse need reserves.50% rule would work like this:rent: $700NOI: $350payment: $500 (p&i)cashflow: -150 a month (ouch!)

Anyway, they also agreed right away to my rental rate increase of $150 without question, the man/baby daddy/husband that lives there doesn't speak any english so I'm starting to think that these people just stiff everyone and agree to whatever even if they don't understand it.  

Wholesale inventory is down and the competition for flips is pretty stiff. 

@Rick Jones If you have the funding to do one of these projects, go for it, but the competition is stiff and in an area where values are mature and high, it will be tough to get a "below market" deal.  

Sorry competition is so stiff where you are.

With a foreclosure you are competing with many other bidders as the competition for these is generally pretty stiff so most other offers will not ask for closings costs to be paid by seller.

If you're goal is to stiff him AND fire him, you're going to have a hard time.

Is the competition that stiff? 

@brianthat really sucks that they try to stiff you, but can't you be persistent?

As most investors quickly realize those particular strategies are hit and miss due to the stiff competition (at least here in CA).