As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes.  

From what I've seen and read, most of the reason operators get in trouble is that there is some type of "event" that has occurred (usually their loan has matured or they've defaulted on their existing loan) and they need to refinance their loan and the lenders require a new appraisal to be done, which usually leads to a lower appraised value, and a lower loan amount, which "forces" the owner to pay down their debt.

@Jaycee Greene  they require a non refundable deposit and give 48hrs to see proof of funds 

If you eventually convert the property to your primary residence and later sell it, the taxes would be prorated based on the ratio of time the property was investment property.These items should be addressed and discussed with your tax and legal counsel to ensure that the exchange is the best course of action given the restrictions and requirements. 

You’ll need to pay MLS dues for access to MLS which in some areas requires NAR/ board of Realtors membership (~$2,000/yr in my market).

BTW: most owners that have hired a PMC, don't want to speak with you, much less meet with you in person to hear a hyped-up sales pitch.Also, you want to do rental arbitrage - so, you will need to be properly licensed to manage properties you do not own as required by your state & local laws.- why would an owner want to do business with someone NOT properly licensed?

Hi Ryan, There are many DSCR lenders that do not have a minimum ratio requirement to get a higher LTV.

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.

There is 1 catch and 1 only that can lesson this requirement.

That could be a good opportunity, but underwriting of a seller-financed fix-and-flip deal requires careful analysis.