Your gonna have to carry an extra month of holding costs, but that is minimal compared to what can happen if you bring in tenants with a questionable history.

These owners responded, I paid them the $100 and paid the back taxes (which were very minimal).Art - it's a residential development.

I am willing to take a risk on this one but want to be educated on the risks and how to minimize them.

Of course if I wanted to change that $1,000 to be more/less conservative/aggressive, I'd simply change the amount I put away (not to exceed my cashflow).I feel this method would give you more control, less to qualify for, and you would be gaining minimal interest vs paying the simple interest on the HELOC.  

However, we do realize that there needs to be a minimal set of criteria to begin with, so we are addressing: Trash cans being out of sight during the week (and we need to address having them put away by say 9:00 p.m. as suggested), landscaping, what types of projects require Architectural Committee approvals (permitted projects only or assembled items versus constructed items), screen doors, fines (penalties for non-compliance) etc...This forum is giving me some great advise, keep it up folks, and as always, thanks in advance.

Don't minimize their potential help, imo.

Your friend needs to discuss his options with a CPA to try to minimize his taxes.

I agree, if the potential is limitless and the risk is minimal, why not go for it?

They figure any money you make on the deal is money that's really theirs.With a private seller, though, you should be able to get away with minimal earnest money.

Its about making a deal while minimizing your risk as much as possible and in my opinion using the least amount of your own cash as possible.