The beauty of long-term cash flow is a reduction in volatility.

There are 5 bins...cashflow, appreciation, principal reduction, tax deduction, mortgage interest deduction.

For example, if your inspector comes up with termite damage, you can ask for a price reduction or treatment by a licensed exterminator and repair of the damage by a licensed contractor. 

The remainder is a reduction of the mortgage principal balance, which is a liability.

Originally posted by kiran K:CitiMortgage REO 5B/4B Duplex - Atlanta SuburbsList price - 39500Offered -42500 (Accepted Offer)Rehab Cost - 14000$ Rented for 1575$ for both unitsSunTrust REO4Bed/3Bath - Atlanta SuburbsList Price -75000 dropped it to 65000 after a monthdropped it to 47500 after couple of monthsPut an offer for 50500 with 5000 Earnest and closing in 10daysOffer Accepted for 50500rehab cost - 4000$ and came with a tenant, found a tenant on the other side in no time rent -1375Kiran, my only question to your post would be: Why would you want to offer more than what the ask price was, particularly the second one where multiple reductions took place, the seller is motivated at that point and the chance of getting that deal locked up for at ask price or below is high.

She went to see a broker friend of mine who said he could get her qualified for a new loan but not for enough to cover the existing loan hence the reason for the need for the S/S flip to get the principle reduction.

I wouldn't be worried about the 5-day inspection period, but that sign makes me scratch my head...if this is a retail flip you have to ask yourself what kind of price reduction that sign will demand.

Any principal reduction over the term is credited (depending on state law where you are the lack of earning interest can be offset with a disbursement fee).

If something happens, send some proof & some estimates and ask for a reduction.

I didn't know the buyer was a result of a wholesalers effort, and the buyer won a small reduction from me because no one else was involved in the deal I thought.