Numbers look pretty good but deferred maintenance will not treat you well in the end.

I will charge my daughter and her friends a below market rental rate - it would still have positive cash flow of several hundred dollars/month after PITI.I will not treat the property as a rental for tax purposes - no writeoffs for anything outside of what an owner occupied home is entitled.Once my daughter and her friends move out (probably 2-3 years down the line), I will convert the property to a legitimate rental property.I think that this would be a good way for me to break into the headaches of being a landlord but am concerned that I may be pushing the ethical boundaries with respect to the mortgage, IRA funds, and tax treatment of the property.

(Although he might treat those workers as sub-contractors, but that is another matter.)He is the GC and wants to be paid as such, but YOU have to pull permits - and then also deal with (possibly failed) inspections?

If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis.

Second, by making the decision that I will be purchasing the house myself if I cant find a buyer, it requires that I be extra careful with my numbers and due diligence.Basically, if a property looked like a deal, I would treat it as my own rehab.

J Scott treats his subs the way I treat mine.

Payroll,taxes,benefits,and paying salary during slow periods is all wasted resources.I definitely agree with this sentiment, but keep in mind that if you're looking to hire a project manager / right-hand-man type person, it's unlikely the IRS would allow you to pay him like a contractor, as he would almost certainly be treated as an employee.But, as John and Rob said, employees are something you should hire only when necessary and not without serious consideration -- lots of overhead, management effort and costs are involved.As an example, I used to manage a 150 person organization for a Fortune 50 company, and the time and overhead spent on management wasn't that much more than what I spend now on a single employee in a small, family-owned business.

That gives you a glimpse of how they will treat your property, and enables you to run away from THEM before its too late!

I vote for just replacing it; after I notice how they would be treating my property.

I don't remember the name of the thread a month or so ago; but, we decided then that one way to qualify a prospedt like this is to inspect how he is treating the property he lives in now.