Whereas if you owed $80k on it, you'd cash flow ~$300/m instead, but for your outlay of just $20k, you'd only need 4-5 years cashflow in your formula to arrive at the same decision!

Some institutions will use rental offset for qualifying purposes, while other lending institutions will use 1.1 per cent debt coverage ratio, which is arrived at by dividing the net operating income by the debt service.

However, applying a simple probability cost to it (probability x cost of event) if I use assumed probability of the event as 63% chance for major (6.7 magnitude or higher) quake in the next 30 years (http://www.earthquakesafety.com/earthquake-faults....) and the $300k replacement value and I arrive at a risk cost of $189k. 

I would suggest just arriving at an hourly rate that the two of you feel is fair. 

This usually means college students, first-time young people leaving home, or perhaps even a newly arrived immigrant.

So in this case we arrive at the opposite answer - we want the loan on the rental and the personal home free of debt.

So we arrive at 10:30 to the place and after knocking and entering the 1st apartment we find a couple still in bed, (after a long night of partying??)

You want all of the money in your account before the guest arrives.

Such a large project windows put us behind schedule a week why we waited for them to arrive

I state it many times in my listings, and in every pre-arrival and arrival message.