For example, U.S. seller sells their 3/1.5 SFH for $90K to Chinese investor with the following terms:$26K down payment5.56% interest-only seller financing for 10 yearsFair-market rent is $1,000Total operating expenses (including property taxes, maintenance, management, insurance and vacancy) are about 41% of gross rental incomeChinese investor cash-on-cash return is 9.2% Chinese investor monthly cash flow is $294Depending on the kinds of returns your investors require, these types of deals could be structured to work with relatively low initial investments. 

Here's my math:$1150:   GSR($58):    Vacancy - 5%; SFR tents to have longer occupancy than MFR, I also assume this covers lease-up fee.($173):  CapEx and Repairs - 15% combined($115):  Management - 10%($50):   Insurance - My estimate($50):   Property Taxes - My estimate($350): Debt Service=$354/month cash flowExpectations of 10-15% Cap Rates is very high and they typically can only be found in very rough neighborhoods.

That states that with 25% vacancy. the other rentals must be able to cover the remaining mortgage this is even if i were to occupy one of the units on a FHA purchase.

Getting somebody who has a vacancy and is tired from the business could give you a chance to pick it up for below market value and they can save on Realtor fees rather than listing.

Vacancy of 2% is your tenants staying an average of over 4 years before a turnover, not likely.

See what is left (pretend $1500), then figure out how much to put aside for vacancies and repairs.   

hi, I am willing to buy 2nd rental in waterloo, I am not sure where the market is going to go in next couple of years, would it be a good location for rentals, as vacancy rate is just 2% ? 

This way, if there was an unexpected spike in vacancy we could toggle back a bit to keep revenues from dipping.

What do your vacancies look like?

However you can not have more than one FHA loan at once. so if you look to buy another property it will have to be 20% down (or more in some cases). for the operating expenses, i usually calculate with 5% vacancy, 7% for repair and maintenance, 9% cap ex and if you choose to use a property manager their fee which us usually around 10%. these percentages are taken from your rental income so the $1600.