Some keep big cash reserves, others are more modest, others still keep access to credit with a little cash.

Sorry to hear you troubles Nate.I CRINGE when I always hear an investor say I bought a "turn key" investment.So far I have never heard of one turning out good but I am sure one exists.Those kinds of repairs costs can be normal.Especially if you have an older property that is being rented out more things will go wrong on a daily basis and it will be more management intensive.The item in your management agreement I am sure will be deemed and enforceable part of the contract unless it is deemed "vague and not descriptive and un-enforceable" by a court of law.Often these "turn key" investments are not deals at all as capital reserves and upfront repairs are misrepresented.I equate it to "lipstick on a pig".

You will want to take care how you fund the 401K, how much is maintained in cash reserves, the type of real estate investing activities and even the use of leverage in a 401K.I would not say that it is certain that flipping the property will be treated as ordinary income in your case because it sounds like there are some facts and circumstances that I'm not aware of.

I've finally got a confirmation deadline to close on the property -12/11/11.

Before you explode like Starbucks, a few words of caution: Have a set amount of money in reserve for turnovers, repairs, vacancies and major issues.

Just wanted to confirm if I am reading it right.

As one of the resident tax guys I can confirm as Jon said.

Yes, these other items (vacancy, maint/repairs, capital reserve, evictions, etc.) are assumptions, but they are nonetheless highly predictable over time.

I thought other agents / sellers could benefit from what we did:- Set the appointment with the seller for the appraisal- Confirmed the appointment the day of with seller / appraiser- Had seller lay out executed contract, sellers disclosure, and addendums in kitchen.- Had seller lay out a list of repairs completed, along with invoices for all repairs.- Contacted appraiser after to ensure everything went smooth.Ready to close now :mrgreen: Danny

Correct me if I'm wrong, I know banks are allowed to lend up to 4 properties with good credit and 6 months reserves on each property with steady job incomes.