I'd much rather be conservative and avoid potential (and costly) pitfalls down the road.While the rule seems to be plain, I'd like to know how it's actually implemented in real life.

Are you including taxes and insurance in your 40/50% rule?

I have a short sale I just rehabbed and put on the market that has a 90 day flip restriction that we signed on the short sale approval letter.

Commissions have certain advertising rules and disclosure laws that must be followed.

It seems like the numbers could work for positive cash flow and following the 70% rule, but I'm not sure if the town that the property to rent in is a strong candidate to own the property.

Even if you're at just two loans currently, the lenders that will go up to 10 are investor-centric lenders, and they will be better to work with, on this loan and down the road as you do more.So your current lender may not be the right one.Also, the following are bonuses you can look for in the lender:* They're "direct" to Fannie Mae; this means they use Fannie's guidelines for the most part, without applying many of thier own in-house revisions (which are ALWAYS more restrictive for investors)* Ask them if the underwriter is in-house and local.

.- Lets use the 50% rule for ongoing expenses.So after you've gone one cycle of option 2a (that is you're done paying the first property off), the numbers look something like this.Cash Invested: 108000*Gross Annual Income: 14400Expenses: 7200Debt Service: 0Cash Flow: 7200* debt service while you're paying it off isn't counted, because the rent covers it.So, you've got an income of 7200 on 108000 invested, or a 6.67% return.

We plan to vacay and scout out the area for our own future rental property.I would think a good property management is key too, if it's a few hours away.Or at least an infrastructure to "clean"/ inspect between visits.I have seen many different contracts. some just a page, some a novel.I have seen relaxed landlording based on the honor system.I have seen strict landlording with RULES and REGULATIONS.I have been in homes, where stuff broke and they were able to fix it right away...that is my biggest issue b/c this lake is 2+ hours awayOne vacay home had a local residence to help monitor their guests (us)

I am looking for multi-family units that meet the 2% and or 50% rule I have read about on this site.

Our rule of thumb is to try not to pay more than 1/3 of the end price of a house for the lot.