A 6% vacancy rate should be adequate to plan off, assuming you sign one year leases with tenant turnover at the end of every lease. 

But must be verified by 60 day history, and must be a gift with no requirement to pay back.Reserve Requirements 3-4 Unit owner occupied properties must have 3 months PITIThree (3)- and Four (4)-Unit Property The maximum mortgage amount for the three (3) - and four (4)-unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status.Livable Conditions The property must demonstrate the following characteristics: A continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for household uses.

This is a low income property.Acquired at $18,500.Rehab should be 5-6k.Arv 35k.It’s an older home with good bones.Updated electrical, plumbing, hvac.Not the norm for this area.Paid cash.My wife is headed back to TX, so coordinating everything will become much more complex from this point forward.A great friend of mine is handling 90% of the repairs.Most are cosmetic, floors, paint, appliances, doors, etc.Hopefully that works out.I told him if at any point things are interfering with our personal relationship, let me know because our friendship is more important.We’ll see how this turns out.I’ve heard it 1000 times, don’t mix friends/family and business.I guess I need to see for myself.Plan A is to rent to section 8, as a 3 BR.This is the tricky part.It’s technically a 1 BR, 2 BA.However, the attic has been converted to living space (2 large rooms).The rooms are adequate size for BR’s however I’m hearing that they won’t meet conforming standards for a BR.The rooms have the sloped ceiling and no closets.Plan B is to find a conventional renter.Plan C is lease option.Plan D is conventional sale.Regardless, I’m comfortable it will cash flow.If I can get a section 8 renter, as a 3 BR is will cash flow nicely!

Even having rooms with doors that do not allow adequate air back out underneath the door when it is closed can cause the system to be less efficient. 3.

If the building is not heated properly, this can lead to structural damage of your property.If you decide to accept this tenant, with his non-conformist ideas, at least make sure he maintains adequate renters insurance and modify the rental agreement so you are on the same page.

@Brandon Proctor Sounds like you are adequately prepared and ready to cause this deal to close as expected.

Plan high for it and cap-ex/replacement.The biggest, most important key is to be certain that your management has better than adequate screening methods in place.   

@Zach Bagby bigger is better if you have adequate reserves.

The building is old (1880) and I would say it is in rough to adequate shape.

The reason for my 60% philosophy is Market Swings, I generally get Commercial notes, so 3 or 5 year terms with 15 year amortizations, the 60% LTV insures if my not is due for renewal in a down market, I will still have adequate equity to refi, considering here in WI we typically dont see 20% value drops in a downturn, but if we did I would still have a minimum of 20% or more equity in a bad time to refi.