They are volatile and extremely dangerous.

No one is more of a danger to himself/herself than the person who's had tremendous success on the first deal or so.  

Get your father a good real estate lawyer and get rid of her before she cleans him out and leaves him with nothing.She's a con artist,pure and simple and your father is in danger financially and maybe even physically if she can convince him to marry her without your knowledge.Take action now to separate her from him ASAP.

Hi John,I didn't look up the whole regulation nor did I research case law about the issue because I would never rent a property with fewer than 1 room per two people, but the way the regulation you quoted was written it does appear to allow multiple people to live in areas other than bedrooms.

I wouldn't normally consider that part of the "50% rule" of operating expenses (which Brett is right, is good to break out, at least a few times just to see what goes into it).I would normally consider that "below the line" of NOI and include it as an extra financing expense beyond the yearly mortgage payments.If I analyze this with 5% down and a yearly PMI cost of 1% of the loan balance (a rough # I came up with just by Googling - it varies depending on down payment and credit rating), it drops to a yearly cash flow of $352, a 4% cash on cash return and a dangerous 1.03 debt service coverage ratio.I'm looking at it as:   Yearly rent-  operating expenses (50% or broken out)= net operating income- annual debt service (monthly P&I mortgage pmts x 12)- annual mortgage insurance premium= free cash flowI think the most important thing which makes this a deal or no deal is the financing - how much you're going to have to put down, how much the mortgage insurance would be, what ratios the lender is going to require.I'd recommend investigating your mortgage options before going further with this or another property.

I feel like I know enough to be dangerous...Finding an opportunity that makes financial sense is my biggest obstacle. 

There are numerous reasons why I would like to start with MF, rather than SFR (economies of scale, fewer investors to compete with, allows for use of professional management, etc.).

But many times as markets mature our clients want to concentrate their debt in fewer properties and keep their best cash flowing properties free and clear to cushion a potential down turn.

The danger comes when your property value drops then you may wind up owing more than the house is worth.

If you have zero experience in REI and just have money that can be a dangerous situatuon.