I'm kidding, but only a little.Nothing has been signed yet, just a verbal agreement in principle.

@Amy Wright Welcome to the sight. 

Once you familiarize yourself with the product, area, etc buying property like this sight unseen becomes simple and more profitable since time is money.

In terms of balloon payments towards principle. 

I am giving the borrowers 2 mod options after the forbearance, both of which involve erasing at least half of the principle and would give me a 30+ IRR.  

By the way, when people use PITI, they are actually mixing some operating costs (insurance and taxes) with debt service (principle and interest), therefore, I think a better formula to use is the 50% rule (ir 45% in this case study) and then subtract debt service.

In my head I would get L/O it out and in essence have a savings account from what principle is being paid down every month.My initial thoughts were this.

That does not include any Principle or Interest on a mortgage if you have one.

If you think 19121 is adjacent to a gentrifying neighborhood, you're sadly mistaken. 19130/Fairmount gentrified years ago and Brewerytown/19121 has been on the upswing for several years (realistically more as I know people that have lived and invested there for 12 years at this point) now with no end in sight. 

If you're interested, you can check out my broker, Summa Real Estate Group, there are several real estate investors "hanging their shingle" with us and the principle is an investor as well.BTW, I passed my state and federal exams the first time through. :-)