The tenants might still drive you crazy, but there will be fewer of them, decreasing your odds of picking a bad tenant.When my children were younger I had some sketchy tenants in one of my buildings from the previous owner.  

If so then your return on equity will be going down as you build equity in the property, in other words as you make payments of principle and interest you will build equity in the property therefore when you compare your annual return (what you get in rents-expenses) to the equity you have built that return (as a percentage) will decrease over time.

Thanks for the reply All Cash.As far as the insurance issue, there are stories in the paper everyday about how Florida is going to DECREASE the insurance rates starting June 1 of this year.

Many voter concerns, including decreasing excessive executive compensation for failing institutions, obtaining an equity position for taxpayers within these same companies and various oversight additions were added for political cover, but are negligible to the primary purpose of stabilizing the economy.

Holding all other things constant, if cash flow decreases, Cap rate decreases.

(rent increases, add laundry, vending, services, etc)Expense decreases available for upside?

Slippery slope, I am well aware of the slipperty slope, example, 401(K)s decrease, housing bust and people get nervous and stop spending, thus business decreases, thus people lose their jobs, can't pay rent, no renters, must lower rent, lower to lower than positive cash flow, lose your rental, lose you credit.

If the goal is to have a K1 to help decrease audit risk you may want to have an LLC taxed as a partnership.

You raise a good point Harrison i guess people will tend to remember that a guy named Whitney doesn't matter what they think about you, just as long as they remember you. and the market in Hawaii is pretty stable, its not as bad as some of the markets on the mainland but right now is still going through a decrease in volume of houses sold, but the median price hasnt changed much at all.

I post an ad on Craigslist almost every day and have 'For Rent' signs outside the house.My question is, are people seeing the rental market start to decrease/slow down?