What might be insured is between the insurance carrier and the lender.Considerations are vast, the local economy, the project, management, financials, timing of the project to completion, basically all areas that a lender will consider.As to sub-prime, never heard of it, as coverage is generally afforded to strong borrowers, developers that are entering a project at a higher LTV initially and the LTV is reduced as a project comes to completion, the initial risk.Apartments or properties held long term can be insured but again usually to cover the LTV risk, that is risk enough and to add sub-prime credit, management, or low debt coverage issues really isn't an insurable risk.

I worked with my agent (who was also a PM and friend of mine) and determined that I could get rent that could cover the mortgage and the operating expenses, reserves, vacancy, etc with a little cash flow.

@Dion DePaoli , I already have a $1 Mil Liability Insurance policy on my rental property that also covers my cars and primary residence.I am also concerned with the Due on Sale Clause.

You mean to cover the costs of the sale and 3 or 4 K after years of holding it?

My offer is just enough to cover there mortgage and then some (170k for a 165k mortgage).

Another book I will recommend is:Every Landlord's Guide to Finding Great Tenants by Janet PortmanThe author is an attorney so she covers all the legal issues about renting property.

Would the income from the 4 plex cover the mortgage at that low of a down payment?

HomePath accepts at least up to a 3% sellers credit, so you could have not only lowered your net purchase price, but brought 3% CASH to the table - to cover your closing costs (or consider it a 12% downpayment..)

Bought new large machines for about $1700 I believe (delivered, w/ heavy security covers for coin boxes), so they should pay themselves off in about 2-3 years.

You can raise private money to cover all of the cash needs of a deal, so as long as you know how to manage contractors to produce results, and manage a management company over time to keep the property full, there is no reason not to go directly into multi-family.