If the seller accepts your offer and said he will evict the tenants before closing you need to put the full amount in escrow to protect the seller.

If one were paying all cash, they would have an 8% return plus tax benefits with some inflation protection via rent increases, but at the end of 20 years they would not get the principal back, so it's not truly an 8% return.

Me and my father now own 5 residential rental properties in CA and looking to protect ourselves from future potential problems.

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I want a guy who is licensed, will warranty the work and carry insurance that will protect my property in case he messes up. flood burst pipe/fire/boiler blows up etc...but when hiring carpenter, painters or flooring people ...do I really care if they are insured or not. those folks will show you certificate of liability insurance ...which does not protect the guy from injuring themselves on the property. how much damage a painter can cause or flooring guy ?

Is there a clause you would recommend to protect me in this scenario, other than having a contingency?

Smell the carpet, especially if small dogs.Figure out what you can do to better weed out high maintenance tenants, annoying is not a protected class.

Can I/should I dilute my liability and protect my properties by forming separate entity to manage my own properties?

Thanks so much for the informative response, Ned.I've not heard of RESPA before, good to know there are already protections in place for this sort of thing.Also interesting that you mention the title company is also liable.

If they were everyone would be rich.In terms of unit mix, the more units in a building the greater protection against vacancy loss, however the more units the higher the priceIf you do not have 20% to put down odds are that you will have to use FHA financing which is only available for owner occupants.Where I live I could not get a good cashflowing property in an area I would like to live, so I buy in more urban areas.