The approach my investor had was straight talk about the numerous issues he saw, some of which were not mentioned by the GC:  foundation, water damage that may have come from the outside, perhaps from the runoff from the neighboring property, rotted base boards in the corner (water damage) that could mean deeper issues.  

But in commercial real estate your risk is lowered extensively by doing proper analysis of properties and only moving forward with the ones that are numerically "Good Deals."

I've looked at some stuff but dont really like the risk/reward and/or time factor with most other things.  

Of course, getting it under market is better, but to me, that doesn't preclude at-market deals if everything works out numerically.

Cost is $39,900 and will most likely rent for $700/month.I plan to have this house paid off in 18 months, at which point I will begin using the additional cash flow for future deals, savings, etc.The question is at what point, numerically, can I stop putting the normal percentages (i.e. 7.5% for vacancies, 10% for maintenance) away from the rent monthly, or at least reduce the amount to use more of the income for future investments?

If you want to manage it all yourself and take on both all the risk and all the reward, then it's time to hit the books and start building your own portfolio.

I learn by doing anyway, just sticking to my standards so if I do make an error it will be mitigated by small risk / small reward.  

I will say, I've picked up a solid base of knowledge thanks to numerous helpful podcasts, blogs & books that have been recommended here and elsewhere.  

I disagree that tax can only be deferred for as in the scenario where we take back a 2nd note for any am't above $800K for the house, the payments can be made over time, which then can be paid in years when there is no W-2 income or offset against numerous mortgage interest deductions.  

Still, the rewards of what we play in here (which is a saturated market) are far better than other places around the country where you can add to inventory at the drop of the dime.