Reuben Royal, your rent needs to be considerably higher than just the mortgage payment in order to be profitable.

I will surely do that from next job. learn hard from previous two contractors. it just hard for me to believe that the contractor can just ignore what's in the contract and ask for considerable large sum of money. even he used all the money I gave him for the material as he claimed, he should still follow the contract, right?

The return w/o any other considerations is 2.5%.

Your analysis doen't take into consideration the cash on cash return, which is the most pertinent.

Then you can modify your note later under different terms for the consideration of releasing the additional collateral, like getting a short balloon payment.

I've learned that with asset lending I give almost no consideration to the quality of my borrower's credit.

I got that initial boost of confidence most newbie investors strive for, the decisions I made were based on months of reading, asking questions, making spreadsheets and analyzing properties in that market.The best thing I could take away from this experience is that sometimes being ready to pull the trigger is a lot more than just over coming the initial fear of bidding; sometimes it's about being prepared to do whatever you need to just to have that opportunity.

Do you take into consideration vacancy rates when searching for a new market?

Another consideration is differential.

Eliminates the foreclosure risk.5)Have the owner sign over the property to me (SUB2) for some reasonable consideration to them at closing.