We (and most of our clients) put rental income towards the next property almost always - at 10-15% net pre-tax, it just doesn't make sense to do anything else with it (except occasionally spoil ourselves silly, of course ;))

I work for a national commercial lender, and its a very rare exception (if ever?)

I have a situation that is very similar, except its for a mixed use commercial building. 

What happens when you become the 'jack-of-all-trades' is you forfeit being exceptional at anything....

But with the exception of that aberration the average cost of a house as a percentage of income has not significantly change for almost 100 years.Now you are left with the argument that borrowed will be worth less in the future, that is true if a) your income increases and b) you do not refinance that loan and c) the loan is not tied to economic indicator.

This person doesn't actually own anything except the option agreement.

If it is not in that business a C-corporation has more than 60% passive income it will be treated as a Personal Holding Corporation. (30% tax rate) unless the income is distributed to the shareholders.There is however, an exception.

@Patrick L. even in Fl I can't see the added liability and cost of maintenance being viable for a pool except in perhaps high end rentals.

My only exception is for larger projects where there is a lot of materials involved, then I will pay a deposit towards materials costs.

There are no other improvement except main utility lines.