It seems as if a longer term option window with a strike price that follows the declining principal balance is a better option.

Just looking for some strategies on structuring a JV on a rehab/resale (1-yr note) and a buy/rehab/hold on a 5-yr note...all private money. 1-yr would be deferred repayment for one year with P&I due in full at maturity, and interest only payments on the 5-yr with principal due at maturity...1-yr note would be SFR and the 5-yr would be on residential multifamily 2-4 units...probably 3-5 investors per project...

Contact Jennifer Larsen at Hagen Wilka and Archer...I got that referral from a principal at Lloyd Companies and she's been great.

Assuming a sale price of $95k and current mortgage amount of 80k, I plan to structure it like this:Lease option fee paid to the seller: $15k (equal to their equity)Monthly payment: equal to the mortgage payment (I plan to pay the bank directly)Purchase price: the payoff amount at the time of the purchase ($80k minus whatever principal was paid down)This way, the seller gets their equity and gets rid of the mortgage payment.

Originally purchased as a principal - it served as a rental for a few years while I lived abroad.  

A 30 yr fixed 3.5% at 20% down on a 600k purchase is $2,900 principal and interest and 700 tax and insurance so thats not far off from 3k rent and maybe a tenant pays $1,500?...

One of my rentals doesn't quite make the 1% rule, but COC (counting principal pay down) is pushing 25%.

Then the BC portion closes minutes/hours later on the same day and pays transactional funding principal+fees+any closing costs.  

how do you calculate cap rates & CoC when mortgage principal would be on both properties?

Foreclosure when no one bids the amount you set as the opening bid (your principal balance plus expenses) is even more expensive.