It seems like there's an issue at least once a month that I must pay for, on top of trying to budget to fix several leaks (roof included), radiator not working, no shower in one unit, etc.

I wanted to start this conversation because I’ve seen too many investors (including myself) get into serious trouble due to a lack of cash reserves.

So if I do a good analysis of the property (including all the costs) and the property generates monthly CF with a DSCR above 1.1, I would be removing a big risk because the numbers add up.

We completely gutted and finished the basement including adding a kitchenette and 3/4 bath, moved out and are now renting both apartments.

My primary goal is to find the most cost-effective solution that minimizes tax liabilities, including avoiding property tax reassessment and maximizing the step-up in cost basis. 

Many PM contracts have an early termination clause, which could include a fee or require a notice period.

Here are the key numbers:Potential purchase price: Mid-$400k rangeAppraised value: Estimated at ~$500kRehabbed comparable properties (comps): ~$580-600kMonthly PITI (with 5% down, including mortgage insurance): ~$3400First-year PITI (with 2-1 buydown): ~$2900Monthly income (after taxes): ~4-5kLiving expenses (utilities, groceries, etc.): ~$1600Savings available: ~15-20% of the purchase priceCash to close: ~$34kRehab estimate: ~$34kRemaining reserves: ~$20-25kTo fully fund the rehab, I’d need to come up with an additional ~$15k in the short term, which I anticipate paying back quickly once the rental portion is generating income.

that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

A few other houses (all single family houses) on the same street are on the market for rental and they (including my house) all get grouped and nestled under one cover listing as “units” of an apartment complex.

If you are considering long term holding always remember to include your reserves for cap ex, maintenance & vacancy.