Bob Lowry The 2% "rule" is based around a 25-50K house and like Jon said assumes a 6% interest rate, so obviously as you start messing with the basic concept it becomes skewed and doesn't effectively work anymore.

They were not at all happy with that.Long story short, the guy made a threatening remark to the PM today and so the management company just advised me that they are unable to effectively manage this situation and are pretty much hanging us out to dry with a very difficult tenant.

I guess I just felt like water in an old basement when it rains heavily obviously doesn't negatively effect the structure of the home since it has likely been wet since 1938 ...and if it is not a living space, why does it matter to a renter?

Hi Mathew, thanks for asking about in effect the tax treatment of non refundable option payments, rent credit etc!!

I want to keep good relationships with the contractors and not lead them on by telling them I will be rehabbing it.

As it stands now if you were to proceed and she stopped paying you would end up with a tax lien on your property you now have to pay effectively setting you up to pay 55K for the property.

This is very revealing and effective.

The article I co-wrote with him can be found by following this link:http://www.biggerpockets.com/blogs/2997/blog_posts/22522-8-habits-of-highly-effective-inner-city-landlords

When you buy in the two above markets, tenants you attract are decent and a good PM should screen out the remaining bad apples while ensuring no issues go too long w/o being resolved ensuring good cash flows.I have been cultivating relationships with PMs, rehabbers, and realtors.

But you will need a local bidder and a trust relationship between all parties.