You could be over-leveraged, get hit with a major repair and no cash to pay for it, a vacancy for 2-3 months, or even a bad tenant that causes your life to be miserable while costing you thousands in losses . . . and the market price drops 10% on the property and takes some of your equity.As you gain experience, you can afford to take more risk.

It would take 80 months to recover the losses!

Or what % of the cost is attributed as profit/loss when an insurance company makes a determination on their pricing model? 

I can give you examples of negative or no cash flow investments I made where I made large profits….and a few that resulted in rather painful losses.  

I’m not trying to time the market, I’m calculating values and factoring possible value loss and cost of rehabs and where would my threshold be, that’s on me.

You may want to consider selling and cutting your losses because the community is unlikely to improve in the near future.

Me being a professional over thinker can confidently say… find something that makes sense and go for it, trust the process.I like BRRR, 18months ago We traveled to atlanta, toured like 3 properties and made an offer…. didn’t went trough… but the owner had another house, a dumpster in sw atlanta, close to US 41 in an up and coming place… fair price and enough upside….We bought it and I’ve been re building it up the last 15 months….Didn’t made us rich, but i got my feet wet and learned a TON now i discovered MTR and chose that route, looking to scale the business @Nicolas Londono Gut intuition is best, I always say you learn more from losses then you do your wins!

Does all of the loss come from their down payment, or only part of it? 

.- a couple of missing expenses: lawn care and you might consider loss of revenue on insurance which will cause insurance expense to go up. 

@Ronny Crawford second position means you get second dibs on getting your money back if the deal goes sideways (foreclosure, fire, etc.)You'll record a mortgage against the property.Some things to think about:1) Hard money lenders charge points, it's their insulation against non-pays and weeds out the people who aren't serious (and increases your profit, of course)2) Don't lend to them unless they include you as a loss payee on their insurance, and don't lend to them if they are under-insured (you want to make sure you get paid if the house burns down, for example)If you don't mind, could you share all the terms of the deal?