My PITI payment is $630/month while my gross rent is $1,370.

(I asked to be part of the observation and to closely monitor the process)Now, I will be putting in a Mechanics lien on the property to get my rehab funds 45k back + I have been offered to take the 25% of the gross profits after the sale which I agreed because I'm gaining knowledge of the whole process and be directly looking into each detail of the project.What do you think of this agreement?

"After all, deductions, what percent of cashflow is worth going through all hassle"I think > a real 5%+ on CFBT/Down actual numbers when you buy is reasonable.Another factor you may want to consider is ratio of (expenses+debt)/gross income. 

They are as follows:• Qualified appraisers• Comparable sales data or “comps”• Gross multiplier approach• Capitalization rate method• Essentials of real estate investment analysis software We prefer using a specially designed computer program in conjunction with input from consultants and comparable sales data.

That reserve can grow to 15% or 20% if one of the utilities is not turned on and/or structural work is being done; you can finance up to 6 months of house payment into the loan as well if you wish given it may be months before renters can move in and you can move in so the 6 months of financed payments is a nice option; you will need at least a 680 middle credit score these days; a 3 or 4 unit will need to meet what's called the Self Suffiency Test- that is total of all projected future rents taken at 75% of gross must at least equal the total house payment, you can include the unit you will occupy to meet this test though.Example: Buy at 100,00 and add in 100,000 for rehab + 10% Reserve of 10,000 = 210,000 then 3.50% down payment is 7350.00 with mortgage of 202,650.

Gross income 55K rented heated and lit. 

A gross injustice IMO.It also leaves out HF for High Fees of the refi, but I digress.6 month seasoning is min, 12 months is common.   

From a taxable income perspective, you'd take the gross rent ($1350) and subtract out the interest ($474), tax ($90), and insurance ($87), for taxable income of $699.

They just sense when you say that you can be pushed :)Ewww gross.

I closed on it and am working on the FHA piece - but will hopefully be able to rent it out for $4-500 more in gross rent per month or more within the year.Lessons learned?