It's factored into the cash-on-cash return and increases it so it makes the returns look much better and the property more attractive in certain ways.What is this principal reduction?

As her income increases, I look to pay down our line of credit and snowball our early loans. 

Tell your Realtor to insert this escalation clause with your offer:"Buyer will increase their offer to exceed any bonafide competitive offer by $1000 to a maximum of $XXX,XXX.

Think the 500 dollar range would attract maybe some not so awesome tenants and we will be living with these people so hopefully all of our tenants are quiet little angels hahah. 

Other times we need to look at the income approach, or we can look back at a longer period of time until we can find a comp and then adjust for market increases. 

Lesson 2: If it is attractive to owner-occupiers, they will outbid you. 

Thanks for the feedback, I was looking into an older duplex property that needs some renovations in order to be capable of attracting a more upscale client base.  

That's usually a discounted price to attract buyers.Two, a shortsale means that the owner owes more on their mortgage, plus penalties and fees than the house is worth.

A quick glance at housing affordability in AustinMedian Household Income App (Forbes): $73,493 ($6,124/mos)Cost of Living (Forbes): 15% above nat'l avgMedian Home Cost (SFR-ABOR Stats): $302,250Assume 5% Down Payment Conventional Loan- 30 year amortization- $15,112.50 down pmt + any closing costs• Percentage of residents with less than $1,000 saved: 56%• https://www.gobankingrates.com/…/…/americans-savings-state/…- $287,137.50 amt financed- 4.375% interest rateHow the payment looks:PI= $1,433 mosIns= $105 mosTaxes= $458.33 mos (Assume $5,500/yr)HOA= $25 mos$2,021.3/mos PITIDTI’sHousing ratio= app 33% @ median income ($2021/$6124)FHA should be at 31% or less with Conv/VA/FHA being around the same although all have exceptions in placeTotal DTIThese hover between high 30%’s to manually underwritten total DTI’s in the 50’s or higher depending on the programs@ 45% Total DTI Ratio and assuming the above PITI pmt that gives a borrower approximately $734 per month in all other creditor debt (cars/cc/personal loans/etc)These numbers are not perfect but are rather a quick illustration of current housing affordability in Austin for Retail Buyers.Summary: Housing is becoming less and less affordable in the COA for end retail buyersAssuming increases in property taxes/insurance/interest rates on the horizon how does this affect us as investors?

A HELOC limit can be changed, interest rate increased or stopped (you can no longer borrow more even though you are below your limit).