I decided to take them since I was charging a $5k option fee and $1600 for rent with $100 of that going towards a credit if the option is exercised.Type: SFR 4bed 2bathPurchase Price: $167,000Option Price: $220,000, 2 year termClosing costs: ~$7,000Rent:$1,600 with $100 as credit towards purchaseTotal Loan value: $125,250 (25% Down)PITI: ~$750Maintenance, CapEx, Vacancy: budgeting ~$300/month, though theoretically with a lease option this should be $0Total out of pocket cost: ~$48,000Cash Flow: ~$500/month or 12% CoC accounting for all costs with self management*numbers are rounded and estimates, I do have a spreadsheet to calculate all of this but just obviously the numbers change with all assumptions that go into itI know if all works out this deal is amazing, but I am worried about this tenant being a problem since there are a lot of evictions in the background check (almost every year it seems).

But for a stale listing, you can sometimes get away with various contingencies like financing or inspection. 

I believe it’s about 2 years after doing something before you can get away from that expense if you wait to arrange a construction loan later on.I recommend speaking with your Title company to clarify these points as they are the ones who have that information.From what you describe, it sounds likely that you’ll have that cost to bear.

Using round numbers, your strike price to defer all tax may be in the neighborhood of $475K.  

Im running 30% expenses to bring my NOI rounded down to 55K. typical cap rate in my area is 6%-7%.

I plan to keep this as a weekend getaway from the madness of Chicago city life but AirBnB when Im not there (already have approval from HOA).

Im running 30% expenses to bring my NOI rounded down to 55K. typical cap rate in my area is 6%-7%.

If you’re a qualified borrower with strong occupancy and P&Ls, you can definitely get away with a cash out deal with normal conditions (and apparently a killer rate).But for those wondering what the RE finance end is looking like, that is at least a glimpse into what we’ve discovered over the past 3 months.

I plan on renting out my current home when that happens, and in 5 years pick up another 2 doors at minimum to round out a 5 door portfolio, which I will most likely manage on my own.

SFHs may attract owner occupants who will pay more.Balancing out those negatives, it is sometimes cheaper to do work on big ticket items.