The criteria for the inspections is pretty strict on safety and good condition so take that seriously.

Ensure to read the approval letter, short sale affidavits, or any arms length transaction paperwork provided; these are common areas where you may find verbiage on this matter.

That being said, I don't go any higher than 25% loan to value, just to keep a safety net in place should a market correction be around the corner. 

This will only work with small local banks doing 5 year arms.

I was told it was doable and was given those conditions to apply:1. 35% Down Payment2. 1, 3 & 5 year ARM's amortized over 30 years : NO prepayment penalty3.

There are no realtors involved and this is a non arms length sale due to being between personal friends per the seller."

Businesses that has more money to lose, has more money to pay, is too scared to do to the other side (hiring unlicensed contractors), simply because they don't want to pay more once a person breaks their arm or falls from a ladder during their time there.

Interested to hear feedback from the community:16 units (Two 8-Plexes)Purchase Price: $450,000Closing Costs: $30,000 (this seems high, but I'm assuming includes sponor's fee)Total Price: $480,000ASSUMPTIONSAnnual Rent Increase Assumptions: 2%Annual Operating Expense Increase: 2%INCOMERental Income: $9,500/moVacancy Loss: $903 (9.5%)-----------------------------------Gross Income: $8,596/mo ($103,170/yr)EXPENSESProperty Taxes: $452/mo ($5,434/yr)Insurance: $375/mo ($4,500/yr)Utilities: $1,200/mo ($14,400/yr - hoping there may be a way around this, but I think included utilities are standard in this market)Maintenance & Cap-Ex (15%): $1,425/mo ($17,100/yr)Property Management (8%): $687/mo ($8,254/yr) --------------------------------------------------------------Total Expenses: $4,140/mo (49,687/yr)Expenses as % of Gross Income: 53.09% (numbers seem reasonable, but % seems a tad low; I've heard multi-family is usually around 60%)Net Operating Income (NOI): $4,456/mo ($53,483/yr)CASHFLOWNOI: $4,456/moMortgage (25% down, 5/20 ARM, 5% interest): $2,227/moTotal Cash Flow: $2,229/moEQUITY ACCRUED: $10,082/Year 1TOTAL RETURN: $36,837/Year 1TOTAL ROI: 20.68%CASH-ON-CASH RETURN: 15.02%The return figures include the sponsor's/syndicator's equity stake and PM fees. 

Maybe 15 years ago a typical retail home-buyer would have gone "oh it's a portfolio ARM with a higher rate, and multiple points up-front, no big deal, let's do it!"

Example--- 11,995 down includes  all ATT. fees  1,990 month includes taxes and insurance( ARM and HELOC) 298,000 with 23 years left on the loan.