And some will want a cash reserve of some sort. 

Getting a traditionalMortgage will help you build your credit and having renters will help pay the mortgage for you and start building some cash reserves moving forward.I would suggest starting with whatever bank or credit union you've had your checking and savings with growing up.

Assuming your reserve funds plus an additional 10k out of pocket covers all major expenses/vacancy/updates over the 30 years, you only spent $60,400 on a $150,000 house.

My money remained invested so I used their free money.While most borrowers won't have large cash reserves, underwriting will look at a credit line and the ability to pay it off in full, so there is a point where debt becomes more irrelevant in a credit situation.Another point is debts with less than six months payments remaining, these payments generally won't be counted. 

I set aside about 32-35% for reserves and I still like to finance and have my cashflow greater than $100 per door. 

From my preliminary research, I have found that condos' HOA fees work against their resale and price appreciation so I have my reservations to make a purchase right away.

He should pay an option with reservation as consideration.

You may want to stipulate that they cancel all future reservations before you take possession of the property - you don't want someone showing up at your door expecting a place to stay in a couple of months!

You are still building up equity though each year with potential for appreciation and in future years it will begin to cashflow as more equity is built.Here's an example from one of my deals on the calcs I ran to measure monthly cashflow:Purchased for $306000 Rental Income $1600 - after 5% vacancy - Net rental income = $1520Monthly mortgage payment $1029.65Maintenance reserve $50Condo fees $303Property taxes $115.25Insurance $35========Net cash flow ($12.90)Properly estimating rent is harder to do as you may drop lower than you had planned to attract quality tenants so I use conservative rental numbers.

The Federal Reserve Bank of St.