Although Mike's cash flow is currently at $300 a month, he still has a very high mortgage payment and not a ton of equity which can take a 30% to 40% dive like it did in the housing crash of 2008 and 2009.  

This has added to the already present gap of "newer" homes being built around the crash of 2005 to 2007.

With new laws pertaining to loan servicing, only a fool would service their own loan without an extensive servicing background, things are fine when all is well but when things go bad, they can end up really bad.The liability involved for a LMO is now huge in a seller financed or cash loan, one crash can end their world, it's going to take either a really sharp originator or a really brave one willing to roll the dice and they may be unaware of the issues.

Have done flips and long term holds in the past (prior to the housing crash).

The crash happened over a period of very few months.There are no metrics you can use about the Great Depression that compare to what we are seeing today.

And if they do, a crash will cause them to lower rates to a possible negative interest rates.

The place underwent a full flip in 2008, just prior to my purchase - as the Northeast market was crashing, but unfortunately not bottomed-out.

Sorry for the delayed response my computer was crashing and took about 3 weeks to repair!

You may do it cheaper in the short run but just like driving without auto insurance, it works until you get into a car crash.

I am not so sure these are true but I have heard this more than once.Interestingly, the government here wants to blame investor for causing the crash.