Our economy is almost entirely based on consumer spending - consumer spending that has been financed with debt and fake appreciation (first on stocks, then on real estate).

That fraction is the total debt divided by the basis.Then, yes, you will pay taxes when you take the money out.

As long as all the debt is acquisition debt (i.e., not a refi or HELOC), you may be able to avoid any tax, too.

With debt service of $754, you are necessarily going to lose money on this deal long-term.Stay away.

The units I do go after in which I keep s rentals are newer and in nicer areas but cost 2-5 times more than yours do so my acquisition costs and debt leverage amounts are much higher than yours.Fortunately, I have other sources and means of income besides rentals so I do not rely 100% on rental incoem to survive.Between commercial, flipping residnetial, land development, spec building, short pays, sub2's, etc, I have other income streams.Again, the course of action is up to each individual.

Usually, the seller is notified that you have an end buyer to assign the contract to.Often times, if your PSA involves debt financing, the seller will stipulate (if they know what they are doing) that they must approve your end buyer who you are assigning the contract to.

We went through the foreclosure process and took possession on the property, May 08.

Now my residence is appraised at 239k and it is fully paid off, BUT my wife and I have a deep wish to keep it debt free, which eliminates the amazing problem solving tool of simply having a 100k or so HELOC.

I hate to sound like a jerk but I can't help but blame the homeowners mostly; I'm sorry but don't take on a debt if you cannot pay it, or do not understand the terms of it, this is so basic.

I see this as $1,000 a mth rent and deduct 50% for maintenance & vacancy which leaves 500 a mth minus your debt service = +$340 a month is a good deal