I will just assume NOI is correct, based off the $1.39MM loan, that would mean $80K in debt services ($6,665 x 12), leaving a $-31.2K cash flow a year, that makes no sense hahaNow we have cash flow for year three, we get a -6.7% cash on cash return, again makes no senseUsing year 3 sale price as an example ($2.48MM) and the 5% cap rate listed, this means annual NOI is $124KDebt service is $80K, leaving $44K in cash flow, can you confirm this?

@Jon Quigley My experience is that banks look at your total debt to income.  

One disbursement is made at settlement, then construction draws.

But you can't give any guarantees to the seller.If you leave the tenant buyer to their own devices and do not consul them on improving their FICO score and their debt to income   But doesn't look good for you as a lease option agentI recommend you look at upgrademycredit.com and ask for Blair Warner, who has a huge amount of experience helping people increase their FICO Score, and in  loan origination in generalAnd he resides in the great state of Texas, but does increasing of FICO score consulting business in all 50 states.

Lots of great people on BP some very experienced folks willing to share.. but they are not going to do it for you or spend hours explaining it to you verbatim like a paid coach will.If you don't have the money for coaching then by all means don't go into debt for it.

These fees should be paid out of proceeds at settlement.

This allows us to be able to support the mortgages till the rental income is able to cover the debt. 

It takes time to establish credit (3+ years) but once you can prove that your able to pay back debts the banks will want to lend you more and more; which means more opportunities in real estate.Here's a few rules you should keep in mind...1.

But, if you chose not to hold the property in your portfolio and to put it on the market and sell it for market value the scenario may look like this:  (Win-Win, he no longer has to deal with a property that he doesn't want and his debt will be erased sooner rather than later and you convert that 50-75k of equity into cash that you can use for your future deals). 

Comps in the area are going for about $245-$280/sqft depending on condition.Now heres the problem, we just did a home inspection and found out there is only 60AMP service w/ knob and tube wiring..siding has dry rotted and the windows need replacing.A minor foundation settlement crack.  5 Year old roof.