The average cap rate is around the 8% mark, not extremely high like in some areas, but high enough to produce returns in the teens with conservative leverage.

Or the rent is not as high as expected and after refi the property is producing negative cash flow month after month.

Welcome to BP Dustin, I'm not in the teaching phase yet, just beginning myself, but this site is an incredible learning tool, look around and check out the articles and forums.

On a serious note, and to answer your question, my opinion of bad debt is debt incurred to purchase a liability, good debt is debt incurred to purchase an asset.In otherwords, taking out a loan to buy a boat is bad debt, while taking out a loan to buy a property that produces income is good debt.

The numbers I have run though it still produces cash flow.Also the owner is willing to owner finance, and not require 20%+ down like I would need through a bank. it is also currently all rented out.I have not began discussions with him so I do not know an exact interest rate or purchase price.

In CA I prefer the LP structure because of the high state fees for LLCs that produce a high level of income, but you should check with your tax advisor for specific entity selection advice based on your income and tax situation.

It's probably like other areas, made complicated with strategies applied to produce a product for mentors or gurus to push and present the area as being too complicated to make big money without thier guidance. :)

I am trying to lock in with all my renters because at this level I am producing fantastic returns and the downside risk outweighs the upside potential loss

Ultimately, the producers determined that we were too boring and that our business didn't have enough drama.

Assuming they each can produce the same cash flow, and a similar ROI, I would look for the one with less maintenance over time.One pro for buying a townhome, if its newer construction, is that there is not as much maintenance to worry about.