I can likely do this loan, but in all fairness, with this type of loan I suspect a community bank is going to beat me out.

You've got to include loan pay down, appreciation, and depreciation in your return calculations.The point of cash flow is to keep you safe.

If you're a single mom with student loans, a car payment, and living paycheck-to-paycheck, then $20,000 would be devastating and a reserve is critical.

We also have many unique buyer incentives where an investor can get up to a 10% price reduction to come into immediate equity, or get that 10% as a cash back at closing to reduce your down payment and increase your ROI, or buy rates down into the low 4s on 30yr loans to maximize cash flow.

Also, with a VA assumable, if the one assuming the loan is not a veteran, then the seller (veteran) entitlement will still be tied up in that property.

Should we pursue a "cheap" rental in order to build rental history in the hopes of securing DSCR loans down the road? 

I financed this deal on a 30yr conventional loan and I put 11,000 down with a 6.625% interest rate.

This is really a lot of information packed into a densely worded post.Yes, you can use loan proceeds to buy out another member, but it doesn't seem like you'll have enough to buy out and develop.

They asked me to empty my savings, max out cards and then finally to take out a loan.

Conventional loan, 25% down at ~7% interest rate How did you add value to the deal?