This refers to the rental income produced by the property above the Principal, Interest, Taxes, and Insurance (PITI).If you are buying a 3-4 unit property, you will need to have additional funds to meet the reserve requirement, which is typically 3 months of PITI.

The knowledge on here is tremendous and personally owe quite a bit to BP.That being said, it seems like over the last few months the quality level is going down.

Is it possible for me to later occupy the property to claim the $250k tax exemption for proceeds from the salesale of a principal residence?  

We owe the world our best every day regardless of our endeavor.  

I like to write in outline format because I believe it is easier to respond to and clearly outlines everything I want to portray.Background:My wife and I live in a condo in Los Angeles owned by my mother-in-law• My mother-in-law is willing to gift us the property• My mother-in-law wants around $100k and to go in together on a rental property near Palm Springs• My mother-in-law still owes $170k on the condo we live in and has about $390k in equity on this place• My wife does not want to leave the condo to start acquiring properties, because my mother-in-law will sell itI want to start investing in real estate • I want to own the property we currently live in, to show lenders that I have an asset that makes me reliable to loan money to Title Agents/Lenders• Want us to purchase the home from my mother-in-law• Want us to purchase the home between $300-400k or do a cash-out refinance at around the same amount• Have evaded a discussion around a giftQuestions to Bigger Pockets:1.  

This refers to the rental income produced by the property above the Principal, Interest, Taxes, and Insurance.

Instead look at structuring your terms to get the principal paid down quickly in 3~5 years, with a balloon payment at the end of the term. 

IE most likely these are senior position transactions. so lets think it through.. the borrowers have failed that's a given. the sponsor POL has either foreclosed or gotten a DIL now your fund led by the sponsor is the owner.. they dont need your permission to liquidate the property which may have occurred and if so they are sitting on what ever cash was generated which no doubt is a loss of principal and interest poof its gone.   

(in miles because it matters for FHA guidelines)What is the value of your home, and how much do you currently owe on your mortgage?

Let's say roughly 8K was principal, 10K was interest and 6K was impounded property tax, leaving you with 20K taxable income (36K - 10K - 6K).