I personally have 5 to 10 houses I am usually holding that I don't want to but as they are newly rehabbed and now rented and cash flowing it doesn't bother me if I have to hang on to them for a while.So decide what your risk appetite is first then set your rules.As far as numbers go I find it way easier to work on a fixed minimum margin than percentages.

Depending on the banks appetite for loans, overall balance sheet, recent history or losses with investors, these things can change throughout the year.

Its going to be much more interesting and will whet his appetite into wanting to put it into practice.

@Xin Z. depends on your goals and appetite for risk.

Sometimes an investor's view has more substance than the appetite of an agent who may mentally inflate the value (sub-conciously) because moving the property equates to getting paid.I must admit, whole-heartledly...

Now, if you mortgage broker is finding you products from tier II lenders, then you will get a larger mortgage (though technically you still need to qualify at the BoC 5yr posted rate w/ a 25yr amortization) as they have more appetite for risk ... you will also pay for that appetite 4.5 - 7% If you can produce signed leases and tenant estoppels for the property you are purchasing, most of the banks will count 50% of the rental revenue in addition to your earned income {some use to count up to 70%, but most have pulled back} for qualification.

Kris and CK are talking about private money, which is not available to retail buyers.While 3% sounds low, it is also true that there are people who have different appetites for risk, and there are people that don't even bother to ask the risk/yield question and are just excited to be "investing in real estate".

I would also find out ages on key systems (roof, HVAC, electrical, plumbing, fire alarm & suppression) and estimate initial/short term capital outlay accordingly {If you get to an accepted offer, you'll look at these things in more detail}Are all units separately metered for all utilities?

I'm not sure of the expected loan value however lending appetites for smaller multi-families 5+ are much smaller than larger complexes.

“From a safety-and-soundness perspective, the agencies emphasize that an institution may originate both Qualified Mortgage and non-Qualified Mortgage loans, based on its business strategy and risk appetite,” the regulators said.