We have been taking the depreciation which is around ($225K-40K)/27.5=$6.7k/year – till now about $68K.With the increase of property tax and other factors, it no longer makes a lot of sense for us to keep R as a rental.

That makes sense and I'll definitely take your advice into consideration.  

In fact  I don't know the credit history of any of my tenants - never checked it.Yes I check stuff, yes I have grounds for rejecting applicants, no the state of their credit isn't one of them, yes I know some people here will get apoplectic about that, no it doesn't make any sense to do that for the demographic that are going to apply for a rental in the hood.So with that out of the way and it is relevant context, I am going to post about conversation had with one of my tenants last week.Me: Hi it's starting to get warm and I noticed last year the house seemed rather hot in the summer are you alright for air conditioning.Tenant: We ok Mr O, we got some air conditioners last year.Me: Really, you bought portables.Tenant: No we bought some had someone install them in the windows.Me: You should have told me you needed that I would have got it for you.Tenant: That's ok Mr O.Me: Do you have the receipts so that I can reimburse you.Tenant: You don't need to do that Mr O we are ok. 

Cashflow=Rent-PI-Taxes-Insurance)Of course Brandon's approach brings more peace of mind, and make more financial sense, but I would like to hear some different perspectives on how everyone out there is calculating (and taking decisions) around these ...

Hey Jon,I had never heard of Willits, CA, until just now.This scenario RK sets-up here seems a lesson in hustling and actually does not make sense unless you are marketing to all-cash buyers.

It may make more sense (so you don't lose deals) is to refi INTO a portfolio loan once you've acquired the properties and once they've stabilized. 

One question is does it make sense to make the home “smart” (switches, fans, possibly appliances).

I'm just curious what various lenders would be looking for in compensation and structure of this deal:Purchase Price: $25,000Rehab/Holding/selling costs: $30,000ARV/Sale Price:  $85,00090 days for purchase/rehab/sale**My questions below are coming from the scope of my view that a HML being a formal institution/group with a bunch of standard terms, processes, etc... and a Private Lender being someone with money, willing to loan it short term, without all kind of formalities(if that makes any sense)So in a HML world, 65% of ARV would be right at $55,000... does anyone does this deal without requiring rehabber to have skin in the game? 

I'm not trying to be rude, just curious as to your method as it doesn't make sense to me.

I would also suggest creating a plan for your own real estate investing and figure out if within your plan it makes senses to get your license.