Taken from http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneo...Form 1099-MISC, Miscellaneous IncomeFile this form for each person to whom you have paid during the year: at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;any fishing boat proceeds, gross proceeds of $600, or more paid to an attorney during the year, orwithheld any federal income tax under the backup withholding rules regardless of the amount of the payment.Also, use this form to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

One of the principal reasons for doing that, is now you don't have your personal home loan counting against your first four Fannie or Freddie loans.  

Each payment reduced the principle amount owed by the full amount of the payment, as there was no interest being paid.At the end of the 10.5 years, the principal he owed would be $0, and the loan is paid off.Your example is exactly the opposite. 

Tenants can pay down principal, and3.

As an occupant in one unit you will be eligible for owner occupant conventional financing (best rates), be able to deduct all the interest paid, and your tenants will likely cover most if not all your mortgage costs, while you are paying down principal.  

Learn how to buy properties off-market by approaching principals who have not taken any substantial steps to sell.

They've been profiting by collecting principal+interest for the life of the loan, and any fees assoc. with foreclosure will likely be recouped during auction.The way in which we may help the seller depends on the situation.

I pay 15% more on my personal home, all principal reduction.  

**UPDATED: I see what you were saying now, that the market rents are above some 1% rule but are in-deed $5k/mth...I hope :)**2) Insurance seems low if your property taxes are $5,400/yr - you didn't mention the state this property is located in, so I guess we have to use your number but I would do the "Discount Double Check" on that number3) P/I I assume you are speaking of Debt Service Principal and Interest?

I do my own investments and work with commercial clients one on one as a principal broker.As I get older I enjoy simplicity in my life.