For example, you buy a $400,000 house and your monthly payment is $2200 (I’m using round numbers) and year 1 pay down on your loan is $5000 (again round numbers) OR you buy a four plex and your monthly out of pocket after accounting for expenses and rental income is $1500 and your year one pay down is $10,000.Here you have hopefully subsidized your monthly payment to near or below marker and doubled your pay down for less money.

However, once involved in the discussions, I noted that experienced guys on equity side appear to pretty much trust the experienced developer's numbers, round down on estimated sales/exit - as in "you're projecting a sale of $92.5M, let's just say $90M", and then reminding developer that a very high preferred rate will be given to passive investors, so if projections are off, they will be the first to suffer, followed by the equity sponsor (i.e. very good alignment of interests since these guys are all taking very little fees, instead focusing on back end and trust in themselves and their deals.) 

Telling me I shouldn't invest in NJ will not be helpful.If this fails I need to pressure them by raising their rent as much as I can get away with and close the laundry/storage area and refuse to let them store crap in the hallways, which will cramp their style.

OOS Tips:-Get away from popular cities.

The reason for this is because the law recognizes that CFL’s are big boys and girls who risk only their own money (and who can only sell their notes to other CFL’s or specific financial institutions), not that of the unwashed public.The hot ticket lately, all legal, is to originate loans as a CFL and enjoy the limited restrictions on origination, then sell the loans publicly to other investors using a broker’s license (subject to SB 978).

Don't get caught in the noise trying to chase the golden ticket. 

For a residential, that gets depreciated over 27.5 years as per IRS, so if you divide by 27.5 you'll get your annual depreciation =  $5,454, let's round it up to 5,5K[Again, this is simplified as things get more complicated in the first year when depreciation is prorated and get even more complex if you accelerate depreciation with a cost segregation].So, now if you have positive cash flow of, let's say 10K, you''ll have to subtract the depreciation and end up with a taxable rental income of 4,5K. 

What I’m trying to do is buy all surrounding homes because I believe my city is next in terms of the potential increase in value.Bought my home for $240k 3 bed 2 bath (rounding)  there’s a 3 family literally right around the corner for $380k with 7 beds.

This one needs a plane flight out there.He sounds believable, but a simple round tripmight end up saving you a ton of heartache. 

@Aymen Mandil My biggest gripe with a HELOC is that the full balance is due at the end of the loan period, so while you can get away with interest only payments for 10 years, after that 10th year you're going to owe whatever you borrowed all at once.My second biggest gripe is the variable interest rate.