It's hard to tell the whole story in a forum post, but I appreciate your rationality.

There's always a reason . . . not always a great reason -- but people are mostly very rational.  

So while leverage is very powerful, by itself it's not enough to make real estate a superior choice for someone trying to make a "rational" choice.But what about cash flow?

Basic Frank and Dave rule of valuation is take the lot rent rent, multiply by number of lots, then apply a 30% or 40% expense ration ( 30 % if tenants pay utilities, 40% if park pays for it) .

You are an investor who is making sacrifices now for their future benefit; you can see the rational of paying off your highest interest rate loan and don't need a behavioral psychology trick to keep you on track.

So I don't think I am making this decision emotionally.I just want to make sure I am making a rational decision, since this property will not cash flow but it lines up with my long term goal of buy and hold.If this were a 30 year loan, I don't think I would even have these concerns.Thanks for the feedback.

Now I am in no way saying be rude to sellers or anything like that, it's really about being more assertive and knowing the value you bring into the transaction, it's like when the pretty girl knows she's pretty, you have to be picky too...Not every seller is going to be rational or open to how you do business and that's fine, qualify them Quickly and move accordingly. 

As such, again they will beat out a pre investor 100% of the time and for what they are doing (basically locking in a place to live at a reduced rate) its rational.

2) what is a reasonable expense ration to assume on a college rental at the upper end of the payment scale?

His last resort is his only rational option, sell.