I'd end up with a property that barely breaks even vs a property w gobs of equity and a healthy cash flow.

Are you able to give a break down of the numbers on the deal?  

The good news is that equity fund activity is way down from the last few years.

This builds trust and can break the ice for you which will ease your nerves when communicating with the seller.  

Obviously I don't want to be breaking laws.

Please comment on this as I want to know investor's opinions about how accurate these type of articles are.http://money.usnews.com/money/blogs/the-smarter-mu...and http://www.realtytrac.com/news/real-estate-investi...

At or about 2%, much lower than that (when using MLS) isn't a deal and I would break even, lose money in the opposite of an "up and coming" area. 

Potential break down:$1818.91 mtg payment assuming 3.75% note rate (400k sales price 3.5% down with 1.75% upfront MI financed into loan FHA)$273.42 Monthly MI FHA (factor when LTV is 95% or greater is .85% annual /12 months)property taxes about $650 per month based on aboveBoiler/heater about $400 average monthly based on the above between high months and low monthswater trash - assumed - $300 per monthElectric (assumed tenants pay this) $0.00property management 8% of gross rents $371.20 per/morepairs $300 per/moAssuming 4640 gross rents, the net monthly cash flow will be around $526.47  a month.

Yes, servicing is a cost of business and effects the ROI, the discounts I usually work at, $15.00 won't break my return.......it's all relevant.But, if you collect on a small note, I suggest you let an attorney tackle notices of default or hints to modifications......if all goes well you should have no issue.While you can hold a note long term, I'd rather see them pay it off as quickly as possible which increases your ROI and gets you ready for the next deal with money in hand.

Break Down example: Loan amount 100,000 (30% down payment)50,000 to buy property40,000 for rehab10,000 utilities, insurance, taxes, closing cost, etc.