He was my roommate before I purchased additional rental units.

And again, make sure you can make those payments for at least 3-6 mins with no income if you’re going to own a rental in CA.

Doing so, with preliminary numbers, would reduce our monthly income by a $150 or so since we would have a mortgage on the cash house plus the new house.  

DSCR LoansThis is a perfect 30 year fixed loan designed for Real estate Investors that have trouble showing personal income or are capped at the number of conventional loans they can have.

@Michael I certainly understand that a 30 year pro forma is just a guess and put little weight into property value or rental income in 2040; however, I am curious about the year one pro forma and wanting to make sure that I have positive cash flow out of the gate.

Hello Brandon Sisco, finding the best lender for a 90% loan-to-value (LTV) mortgage based on bank statements can be challenging, as these loans are often geared towards self-employed borrowers who might not have traditional income documentation. 

The bad news is twofold: first, that one or both of you may owe gift taxes and/or income taxes on the value of gift, and; second, nephew is still on the hook for the mortgage I reckon. 

Sum with Gross Margin and that's your EBIT (earnings before interest and taxes).Next subtract out interest expense and add in any interest income(probably none of that).That gives you net profit before taxes.Then subtract out tax expense.That final number is your Net profit or loss.The principle is accounted for on your balance sheet as you pay your loans you reduce your mortgage liability which increases your balance sheet.

It could also be worthless if they are only doing long term rentals since its all passive income...

I'm able to live for free in the main house with the STR income from the ADU How did you find this deal and how did you negotiate it?