Two things. 1) Way below market rates: It is below market rates, but not that far below. This house is in west San Jose, and according to zillow and CL, they

Two things. 1) Way below market rates: It is below market rates, but not that far below. This house is in west San Jose, and according to zillow and CL, they might be able to get 5k for it. Maybe. That's still far below the 7k mortage + property taxes, not to mention the investment income you could be making off the 300k you put up for a down payment. 2) Renter protection laws: The renter was introduced to them personally, and they were vouched for by a mutual friend. It is extraordinarily difficult to evict people in the bay area, even for non-payment of rent. The rentees are not professional property managers, they don't know the ins and outs of rental law, so they're willing to take a haircut. Having bad tenants in your property will easily wipe out 2k a month for 2 years. Edit: Of course they could hire a professional property manager, who would know all the laws and deal with bad tenants, but that would come right out of the bottom line. I don't know how much property managers charge, but then the trick is not to find a good tenant, but to find a good property manager. It would be like a non-technical cofounder looking to find a good engineer. Where would you even start?