Lets assume rent appreciates 4% faster than inflation per year (recent times have done better than this) and lets assume it is cash neutral at purchase (It will likely be cash negative at purchase but I am using cash neutral just to make the calc easy). 

I am using the awesome BP Rental Property Calculator and it makes sense to evaluate these two properties together since they are a package deal.

I do want to mention that I am using a 2nd home mortgage product which is a bit better than an investment property.

I am using a marketing company because they have a proven track record and a plug and play system for direct mail marketing.

My sister and I run a music school and hope to eventually have our own building.

The 2% rule I have thrown out the door, however I have been reverse engineering what I will be comfortable as a return on my first property and am using that as a frame work to narrow my search for properties.

I am interested in purchasing it for 2K, however my realtor friend presented me her contract and I am used to using my 1 page, straightforward contract that contains a couple of escape clauses.

I'm going to self manage and am using 10% for vacancy, maintenance, and CapEx.

:I am using principal paydown because of the following:-I am applying extra cash towards the mortgage, which is essentially making my cash return $0.

This is so much cheaper than what I am used to paying!