The important thing for everyone participating in the deal should understand the importance of your involvement in the deal and that this would not happen without how you used your mind to make this happen.You should get most of the renal net of the positive cash flow after any debt is paid. 

He also suggests that it should be having positive cash flow after any debt payment on day 1 before you make an offer on it. 

The debt consists of our personal mortgage, the rental mortgage, and a HELOC (that was used for the down payment on the rental). 

You’ll eliminate your headaches. 

Having positive cash flow including any debt service paid plus any other indirect expenses on day 1 of ownership is usually the way to go.The more units, the better. 

Here is the info:Tenanted duplex with 2 2br/1ba units, both tenanted and renting for $600 each.Financing is via private loan at 4% interest only payments and final balloon payment at end of term (5 or 10 years, tbd)Asking price : 57,900 ***note: following numbers are assuming the seller's asking price, which I would NOT offer***Est'd ARV: 60,000Est'd rehab cost: 15,240Closing/Legal cost : 1,500Down Payment : 17,000Total cost of project : 70,400Total borrowed amount : 53,400Total Gross income : 15,880Total Expenses  : 9,054Net Operating Income : 5,478Annual Debt Service : 2,136Cash Flow : 3,342Even with the over-market asking price, this property is already cash flowing.

I was saying that it could be good debt meaning that the debt payment may be less than the rent.Good luck to you!

@Mark K.Given that you’re retired and 50 you probably don’t want debt for the next 30 plus years.

You could get it for as little 3.5% down with FHA financing, and with a fourplex you could probably cover all the expenses of the home and live there for free.That way, instead of paying $1,000 to $2,000 per month in rent or even towards a mortgage, your mortgage is paid for you (by the other tenants) and you can save that money to pay down debt, invest in the next property, make improvements to the home and increase the value and rent, etc.That could get you in the real estate investing game AND cover your living expenses, despite California's higher prices.

I'm not sure if a bank would count the money on my HELOC as "debt" and say that my debt to income ratio was too high to qualify for a refi since I wouldn't be able to show much rental income on the property yet.