I interpret that to mean that, since Borrower's obligation is limited to excess funds, and there will be no excess funds, then Borrower's obligation is limited to zero, and the second mortgage is dead.What am I missing?

I think $2,800 a month for rent is excessive, specially when that could be a mortgage on a property in Los Angeles.

I have a 4 unit with 3-1s and a studio and at 1.50 wash/ 1.50 dry they bring in anywhere from $50-$80/ mo.

I believe 2 of 4 walls are dry walled and painted white.

Excessive houses and cars waste energy and materials, and require more maintenance.

The reason they are probably requiring escrowed T&I is 1. required at your loan to value for the type loan you got, 2. you're new and they don't have experience with you paying expenses.Amounts that can be escrowed are regulated by federal law, they can't hold excessive escrows.

I do worry that Memphis may dry up at some point and I am looking at other markets around Nashville to go into as long as I can find a good property manager I can rely on.

Since the mls has dried up I have been buying off market deals.

And, as a tenant you can't capitalize costs if you're not in title.Your allocation of rents to credit are excessive and you are setting up a financing contract, which is another issue.

But again, I have no prior experience or idea yet about the expenses involved and the three properties would certainly have more repairs and expenses than the newly rebuilt duplex.Now that I'm actually writing this down it feels like I should go with the duplex instead.So the 8 units could generate $100/door in excess of the duplex as a full rental.