If you find something that just needs paint and carpet and the rent that it brings in gives you a 20% return on your cash or better then you should be in good shape.

I didn't lose any money, only the opportunity cost of using that money for great returns.

Be prepared to come up with 3 years tax returns and a full financial statement.

Fielding phone calls and returning voicemails takes a lot of time.

Investing out of my area for rentals is by far a better return on my dollar, than holding locally.

We even had to sign the permission forms for them to obtain 2 years of tax returns, although they didn't ask us, personally, to provide the returns.

I'm typically a cash flow investor concentrating on solid CoC returns with acceptable risk so continue to generate new downpayments from within.

Leaving the cash in the project still wouldn't be a bad return, but it's much prettier to cash out 60% and have no money in the deal with an income stream and a 40% equity stake.

Write an "estopple letter" that reiterates the key terms of the lease - security deposit, when security deposit is to be returned, rent, lease term, what was in the property, and have the tenant sign it.

To sweeten the deal, you can offer to return some of his deposit immediately upon his moving out, provided he doesn't cause any major damages.