Also - on condos or townhomes, an increase in the monthly HOA fees or a special assessment might wipe out your return.I caution you against counting on appreciation.  

It might get you further than taking the standard eviction process. 

Of course you'd be inheriting any unknown liabilities of the LLC, and you'd be assuming the llc's basis in the property and depending on the LLC original purchase price and depreciation taken, a much lower basis than your actual "purchase price", increasing your taxes when you sell.

The long-term tenants are in a 1-year lease that is actually $200 per month below current rental rates - the current owner has not kept up with the rental market, and has not properly raised rent as the demand has increased.

You will be looking at recognizing the increase now as opposed to later.

In most investing scenarios, even outside of real estate, as the risk increases, so should your return.

In our case quantity helps us because of our strict purchasing standards.

This allows me to do a 1031 exchange and get into newer properties with better tax advantages (once I have used up most of the depreciation from the previous rental), and it allows me to never deal with deferred maintenance issues that increase my cost of ownership.

Never mind the fact that there are a whole lot of people looking to buy a property (increasing by the day) to live in themselves.From what I have seen, most MLS listed duplex properties in Denver (and most other properties, too) are at a purchase price that would put you so far away from the 1% goal - it would be impossible to cash flow them now or in the near future. (1% being the rough guide for considering a property, rent/month is 1% of the purchase price of the property).

Let's rounded to $400/mo/unit to simplify the numbers.That is an income of $1600*12/yr from rent ~= $19,200Now, expenses:Maintenance: $9,600/yr (50% rule)Taxes: Around 1% ( lucky New Mexicans): $1,700/yrMortgage Payment ([email protected]%): $763/mo ~= $9,150/yrInsurance: Around $1,000/yrPossible Cashflow per Year: 19200 - 9600 - 1700 - 9150 - 1000 = (-$2,250)A negative cashflow does not look so good, but here are 2 opportunities to increment it:1) Increase rents.