The 50% is a guideline more than a rule.The way a lender,buyer,and a seller look at NOI are all different.What I mean is a lender will often base their underwriting criteria for doing a loan not based on actual numbers but the lenders numbers based on if they took the property back.Example:I buy an apartment building.I do the property management so I save 10%.The lender will factor in the area average regardless of what the schedule E returns from the seller say.If they take it back they will pay someone else to run it.So all these parties will view a property from a different perspective.If you can appeal and reduce takes that will increase NOI.If you can get a fire-dwelling policy for a house that is cheaper on a group of quad's you purchase versus a commercial policy.Some of these apply to commercial more than residential.I don't automatically discount a property based on the 50% guideline.If everything has just been replaced and my exit is in 3 to 4 years then the updating and expense will be on the next purchaser.Plus if for instance my properties are being redeveloped and torn down I am not going to put much money into them.I will keep them liveable for the short term knowing I am being bought out.

Just to give the rest of this story (in case anyone was thinking of trying this) - the guy lost the house and there are people being prosecuted for trying this stunt.From the AP:FLOWER MOUND, Texas (AP) — After paying $16 to file a one-page claim to an empty, $340,000 home in an upscale Dallas suburb, Kenneth Robinson moved in furniture, hung a "No Trespassing" sign in the front window and invited television cameras inside for a tour.He quickly turned into something of a local celebrity, creating a website, http://16dollarhouse.com , where he sold an e-book and offered training sessions for would-be squatters.

Multi-member LLC's can help with the reduction of IRS audit exposure since 8825(rental property form for a partnership) is audited a lot less than a schedule e(rental property form for an individual/sole propriertorship)So while you may not have all the asset protection you want, A good multi-member LLC with a carefully drafted operating agreement and an umbrella insurance policy, is the best shot out there for a Landlord

If you have invested in any R/E investment education you will hear about many strategies and in most cases the information is condensed over 3 days.

I would also look at inexpensive no-frills windows instead of premium high-dollar low-e exotic glazing.

Also, print off an IRS 1040 schedule d or e or whichever it is and read the instructions on how to report rental income.

Or should I just get an umbrella coverage insurance policy and report the property on my 1040 Schedule E?

I would add off-street parking.There is an updated 3bed/2 bath renting across the street for $1500 w/ G&E.

The banks are horrible about returning e-mails and you'll be luckily if you ever speak to your "negotiator.

I could moderate the site, gather suggestions, send e-mails, etc.