The real risks are to the seller..

Action: confirm it’s income‑producing, not your residence; verify real property status in your state and with your lender/insurer; have a cost‑seg pro model the deduction vs. your passive loss limits; and pressure‑test cash flow so the tax play isn’t carrying a weak asset.

Who has experience with borrowing the down payment, carrying costs and fees to keep the project moving.  

OPTION 1: OPTION 2: When Seller Uses RE Agent & You're Using Property For a Rental When Buying Subject To & Selling to Tenant Buyer Pro: Doesn't require specialized knowledge Pro: Little competition "Adequate" cash flow - Nothing Exciting Can be little $ down You get appreciation if property goes up Can do Unlimited number Can Get Started Much Sooner Get down payment (Cash $$) back immediately Great Cash Flow No Bank Approval Needed No Maintenance or Repairs Con: Have To Have $45,000 Cash for Down Payment Con: Have To Have $15,000 Cash For Reserves (just in Case) Have To Have $15,000 Cash for Closing & Carrying Costs Due on Sale Clause Have to Get Bank Approval Must learn the technique Can only do 4 -10 properties depending on bank Competing with everyone else Requires 20% Down & other requirements If AC breaks - you fix it If roof needs replacing - you pay for it If toilet clogs - it's on you If house gets trashed - you un-trash it You take loss if property goes down in Value Tenant Can Trash The House When Seller Uses RE Agent & Using Property For a Rental When Buying Subject To & Selling to Tenant Buyer Asking Price MLS $225,000 $225,000 Balanced Owed $223,969 $223,969 RE Agent 6% $13,500 $0 No Agent Involved Seller Brings to Closing ($12,469) $0 So No fees Asking Above ARV $0 $0 Seller Walking Money $0 $0 Sometimes Walking Money If I Use ConventionalFinancing If I UseSubject To Asking Price MLS $225,000 $225,000 Amount Down - 20% $45,000 $100 (I Give $100 Down) New Loan Amount $180,000 $223,969 I Take Over Loan Title Report $600 $600 Closing Costs $1,250 $1,250 Monthly Payment $1,151 $1,225 I Take Over Existing Payment When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing.

crap I just wrote a long response and the site went down so here is the crib notes.1. ton of competition for investor dollars so investors look for highest returns and work backwards.2. sophisticated investors look at returns as a function of risk.3. less experinced investor tend to be bigger risk takers.4. to raise money one needs verifiable back ground and a deal that is simple to describe.

I focus on spreading smaller amounts of capital across multiple deals to diversify risk while still participating in larger opportunities.

Section 8/HCV programs can provide stable, long-term tenants and government-backed rent, but as you’ve experienced, policy and administrative changes can create unpredictability.It’s a reminder that while government-backed programs reduce tenant risk, they don’t eliminate operational or policy risk.

You can let the market appreciate over time, force it by rehab or use down payment - usually a combination of all of them, but with 0% equity I don't even know if I'd call that an investment.For a portfolio 50% to 75% is sensibel leverage, if you fall below that you are leaving money and opportunity on the table, if you go above you are redlineing on the risk scale, thats not sustainable for long.

The biggest surprises most people mention are how much due diligence still matters and how different managing paper risk is from managing property risk.

I always recommend we carry liability protection that at least matches the value of the assets that any lawyer can easily find to ensure that the insurance policy is the first line of defense rather than liquidate assets to pay for a settlement.Of course, if you can separate the ownership, it becomes more complicated and harder to "pierce the corporate veil" to drag other assets you manage into the mix.