Stop hanging out with your deadbeat buddies who spend all day drinking, talking sports, and otherwise wasting away.

It's a balance of cashflow and wealth accumulation.One of the goals is to have tenants pay as much of your cost-of-ownership as possible (loans, taxes, insurance, etc.)In high-cost areas, any Class A or B property you buy will usually negative cashflow for the first 3-5 years, until rents rise enough to cover the negative cashflow + rising taxes & insurance.Investing OOS increases your risks because you may not know the market and you can't check on everything/everyone all the time.If you move forward with your buddies, HIGHLY recommend creating a solid Partnership Agreement!

As to the buddy I mentioned in Washington state it was the same scenario; he converted tax-free up to their standard deduction but above that he kept within the lowest tax bracket and paid the smallest amount of tax possible.Thank you @Basit Siddiqi for calling me out on this and giving me a chance to address my mistake; it's important people have the correct information.  

It reminds me of a buddy of mine in San Diego who realized early on that the investors who stuck around longest weren’t just chasing the best cap rate..they were sticking with him because he made them feel like they were part of something that actually mattered.

I bought the land and my builder buddy is putting it up at cost we plan is to hold or maybe I buy him out.  

@Rafael Ramos I have a buddy cash flowing about $1500 per month on properties in the Tampa Bay Area that were built around 2018 and have very little maintenance.

A buddy said there are new duplexes going up just East of the McConnell Air Force Base.

For something more robust, tools like Excel or online calculators from financial planning sites might better suit your needs.Your ROI Formula:ROI = (Net Cash Flow ÷ Total Out-of-Pocket Investment) × 100For your scenario:Net Cash Flow = Annual Rental Income - (Mortgage Payment + 401k Loan Payment + Other Expenses)Total Out-of-Pocket Investment = $40,000 cash + $50,000 loan payments over 5 years.I came across a piece in Bloomberg recently discussing creative financing, and they touched on ROI calculations for multiple loans.Personal anecdote: A buddy of mine leveraged a 401k loan for a fourplex.

Stop hanging out with your deadbeat buddies who spend all day drinking, talking sports, and otherwise wasting away.

They can test even the sharpest investors.Another buddy of mine, who’s based in Austin, had a client that found herself caught off-guard by a last-minute inspection delay on her Oregon property.. from what I’ve heard in Forbes, the local market’s short supply of exchange-worthy replacements didn’t help either.