In my opinion, it is a illogical assumption to say that you will get a 3.75% interest rate, or 2.75% if you assume that it will be $159,200 of principle, in two years. 

@Marco RodriguezI'm making some assumptions here but based on your comments....Local bank, 70-80% LTV 4-5% interest rate, will vary by borrower, your relationship, & property.  

Your cash on cash return would be about 9% with the example you gave.Your "Internal Rate of Return", or IRR, will likely be somewhat higher than that, depending on several assumptions, esp. regarding the sale of the property and capital expenditures, but I would bet it would pencil out to 15% or so based on the example you gave.

Be sure to acquaint yourself with any differences so you don't make assumptions based on your local experience up there.Andy

Since you want to know at what $ the #'s make sense then the answer is around 80K based on the assumptions below.You can check out the home values on my site as well Revenue Assumptions: Based on the 215K asking priceMonthly rent revenue = 1600 * 12 = 19,200 (A)Vacancy = 10% (1920) (B)Effective Gross Income = 17,280 (A-B)Operating Expenses Assumptions:Property Taxes = $2856 (C)Insurance - $1500 (D)Utilities - $1800 (150*12) (E)Property Management - 10% (1728) (F)Repairs - 8% (1382) (G)Maintenance - 8% (1382) (H)Total Opex - (C+D+E+F+G+H) = $10649Net Operating Income = 17280 - 10649 = $6631- Total Debt Service = 15,267 (Down payment 20% Rate 4%Term 30yrs)Cumulative Cash Flow = 6631-17280 = -8636Cash Flow to investor if you put 20% - 55936Cash on Cash - 18.3%Anyways good luck..keep looking

Did you include the heloc payment in your assumption?

I am making assumptions since I haven't spoken to a commercial broker on it.

I've had several $11k water heaters replaced within two days of complete failures so my assumption is that someone is dropping the ball somewhere.

Simple debt deals where folks get interest are a lot easier to figure out than more exotic equity structures where more assumptions need to be made.  

That creates assumptions of improper ideas and well, just mess after that.