Hello BP, I bought a SFH in 2017 and during the closing period, there was some water leaking into the garage after a rain. It was brought to the sellers attention who advised he would repair the garage to stop the flo...

His deposit is 2 months rent (~$3800).So my questions are:1- Is it legal for me to make this kind of a deal with the deposit?

@Nate StitchellPretty sure legally you can't get paid to help someone else buy a home. 

In most markets that can legally have STRs and that the local government embraces, you can get up to 50% more in rental income vs traditional rentals. 

I also have friends who are debt free but math would suggest they could out perform the debt.

There is a $330,000 First Mortgage Debt under the agreement of the commercial loan can be assumed by a new person. (2/3)there's an easily assumable mortgage.

You also don't mention how long you owned these SFR, If you purchased them 5 years ago, and as you say, they bring you $200 today then your expectations don't make sense because you had time on your side to grow rents and reduce debt etc . maybe. you will do good to get $80 at purchase and $100-$150 once reposition after 2- 3 years. 

If the HOA has expenses like filing liens or legal fees those should be paid as well.

With a traditional bank you need to meet their underwriting criteria of Debt to Income. 

Or better yet, a solid and well defined legally sound lease that has Minneapolis Metro,  Minnesota specific terms in it?