We weren't worried about finding a renter seeing as we had several people inquire about applying.My brother kept assuring me his friend was coming and still interested, but without ever meeting him or speaking to him we kept our options open.We slept in our home for the last time on Sept 22nd with the assumption that we would spend the next week or so moving the rest of our stuff out.

Hi Sanjoy,If your plan is to hold the property for five years, I would obtain a five year loan so that you don't have to worry about a prepayment penalty.Of course, if that isn't possible, and you know you will have a prepayment penalty, you need to account for that fee in your disposition (i.e. sales) assumptions. 

@Ethan Schneider I congratulate you on your knowing of not mingling friendship with business, this is one of 48 law of power.The only way we can help someone is if they ask, resist the urge of making an assumption that your help is needed, if they did not ask for help be there as a friend.

Those are low estimates, so just wanting to verify whether those 3% assumptions are based on actual historical data for this property or some estimate provided by a third party, your own baseline assumptions, etc.

My assumption is that lenders have determined (based on research, statistics, etc.) that borrowers who have ~60% or more of their income available for expenses other than recurring debt obligations are more likely to be able to make all of their monthly payments.My question for the BP community is - does anyone have knowledge of the source of the DTI calculation, such as the research/stats that justify it?

The answer is that you underwrite it the same way as any other deal: create a budget based on the current income and expenses and assumptions for the income and expenses after you acquire the property.

SD is a big market, so my guess is you'll have your pick.With the amount you have to invest and my assumptions about your goals - and despite my pre-stated bias -my gut would say MFR.

Pardon the semi-rhetorical question but do you issue a notice to terminate tenancy to a paying tenant on the assumption you're going to face problems down the road and swallow the cost of rehabbing a unit or two?

Is this a good assumption?

Rough estimate of rehab of a shellMy assumption would be that it'd only be feasible starting with a shell.