You are asking a very vague question about a subject that literally has dozens of books written about it.

@Jeremy Torres-Jimenez there is a lot of info out there on this subject.

Not saying you said any of the above, but I personally sign them frequently on properties before they are presented, etc.

., more than half of the calendar year) for the Borrower's personal use and enjoyment·The Borrower may rent the property on a short-term basis provided that the property is not subject to any rental pools or agreements that require the Borrower to rent the property, give a management company or entity control over the occupancy of the property, or involve revenue sharing between any owners and the developer or another party·The Mortgaged Premises must be in such a location to function reasonably as a second home·The second home must be suitable for year-round occupancy with the following exception: a second home with seasonal limitations on year-round occupancy (e.g., lack of winter accessibility) is eligible provided the appraiser includes at least one comparable sale with similar seasonal limitations to demonstrate the marketability of the subject property.

Purchase price: $167,000 Cash invested: $20,000 Bought this house subject to the existing mortgage of $150k, paid $18k in walkway money.

Also wondering what reserves are needed, on the subject property and property already owned. 

@Dave Foster  As a knowledgeable QI what are your thoughts on the subject?

The comps originally projected are off because of the square footage of the subject property is significantly different than comps. 

@Lam LeCapital gains tax rates are 0%, 15% or 20%.You should also factor in state tax rates into your equation, especially considering that you live in California which has high state income tax ratesYou should also factor in if you would be subject to the 3.8% Net Investment Income Tax(NIIT)

The gunk is more a subjective opinion of what an ideal looking one should be.