No need for an appraisal.Since the entire payment is principal, it's taxed at a constant rate (25%, I think) unlike interest, which is taxes at the seller's marginal tax rate.

It's going to reset your amortization schedule and even though you may be paying lower APR, you'll be paying more interest and less principal.

With what you present as weekly income of $1,200 times 52 weeks is $62,400 divided by 12 months is $5200 monthly and you would qualify for about $1,820 per month for principal, interest, insurance and taxes and PMI for FHA and would be about $280,000 home with 3.5% down or about $9,800 down, at 4% interest on a 30 year fixed.

.• DSCRCalculated by taking the lower of the subject property’s market rent disclosed on the appraisal or the lease rental agreement divided by the monthly PITIA housing payment (ARM P&I based on Start Rate) · PITIA - principal, interest, taxes, insurance, and homeowners association dues.

That's seven years before breaking even (excluding a little principal pay down). 

@Spencer HerrickIf your mortgage payment includes property taxes and home owners insurance, you are not required to pay for these items separately.Your mortgage payment therefore includes 4 items, principal paydown, mortgage interest, escrow for home owners insurance, and escrow for real estate taxes.A deduction for home owners insurance and real estate taxes aren't allowed until the escrow account remits payments to the insurance company/county.Regarding a software to determine a deal is good or not - I am not sure if one will exist since everyone will have their own criteria for a good/bad deal.You can use excel to create a formula to allow you to tell you a deal is good or not.You would want to input as much information as possible to provide the best output. 

In my view they are more like 'potentially meaningful guidelines or benchmarks' rather than rules.The reason I say that is because right here in the Salt Lake City / Utah County areas there are people who have made a lot of money (from appreciation, value add, and principal reduction) on deals that don't fit the 1% rule on say a 3 year horizon.

Whatever is left is yout NOI that will be available for you to pay a mortgage payment, principal and interest.

ARV is 120K2) Purchase price $90000Needs $10000$20000 down60 mos no interest$500 payment ($30000 over 5 years principal pay down) Rents for $1000 Cash flow is $330 after taxes and insurance. 

He's just saying that counting on appreciation and cash flow doesn't always work out like you'd hoped but that principal pay down always results in equity except on the short-term in a depressed market where property values are dropping.And this is why Alina asked you what your goals are.