Getting solid rent prices and ensuring you have enough vacancy and capex expenses built in while analyzing properties is crucial.

Expense-wise my mortgage payment runs $55K/yr and PITI runs about $15K/yr for an obligation of $70K.Which of these scenarios is correct as it pertains to the DTIR on this property?

Up date one side by adding additional bed and bath (the other has already had this done and is in excellent condition)ARV: 475-500KMonthly income: $3200Monthly expenses: $2283 (mortgage, fixed and variable expenses, future assumptions) see below-monthly P & I: $1622- fixed expenses: $340/month (water/sewer, insurance, property taxes)- variable expenses: 2% vacancy ($64/month) , 5% repairs & maintenance ($160/month),  cap exp 3% (96$/month): No property management since we do this ourselves for our rentals.- future assumptions: 2% annual income growth, 5% PV growth, 2% expenses growth, 6% sale expensesBigger pockets tool sheet with above data:Cash flow: $916/monthCash on Cash ROI: 6.65%-7.57% depending on rehab costsPurchase cap rate: 7.15%I know this does not meet the 2% or 50% rule but it seems like a good investment for the area.  

Real estate seems to be less expensive in the area.

Learn what each of your monthly expenses will be on average and learn what something will rent for in each neighborhood your interested in.

Do we accept putting additional cash into our first deal or do we keep our eyes open for another deal.Original Offer:Price: 153k ($31k into the deal)Anticipated rent: $2,000k/monthOperating expenses: $9.4k / year (includes management, cap ex, vacancy, taxes, insurance, etc.)Cashflow: $4.2k / yearCash on Cash return: 13.68%The appraisal came in at 146k and they raised some very valid points on why the property was not worth 153.  

You can only deduct the part of the PMI paid that applies to that tax year.https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/rental-expenses/rental-expenses-1

My strategy is to exit in 3 years.Based on my calculations, it will generate 3.7% cash-on-cash return in the first year (with an aggressive expense estimates) - I am betting on the appreciation value than cash flow.

I live in Southern California Los Angeles area, have a W-2 job in Irvine and no expenses or debts, with an excellent credit score. 

I will do anything reasonable to avoid the expense of turning a tenant.