I illustrated that the first step was covering those expenses with passive income to free up earned income from our jobs.

It nicely and convincingly illustrates what seems so completely clear and obvious to everyone trying to give advice on this thread.I think @K.

But it illustrates the potential in Bay City.Key Considerations:Seasonal Tourism: Bay City sees an influx of tourists in summer.

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable).

The diagram below illustrates this cause-and-effect relationship (click to enlarge).Also, the goal of real estate investing is not to own property.

Another illustration of the effect of time on cashflow is with respect to the IRR of 6.43% vs IRR of 9.13% that you calculated above.

The story illustrates that bad things happen, and you can never predict when something can go wrong.

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable).

The income requirements and the dependences are illustrated below.

Regulations include property related laws like the time and cost of evictions, rent control, code compliance requirements, etc.I created a graphic that illustrates the process I would follow (click on the image to see full size):Potential LocationsThe following is a reasonable set of location criteria to start with.