Cash on Cash Return Question...

[Justin Kushner]

Hello, community!

I have a question regarding Cash Flow, CoC return or (NOI / Cash Invested).

I've noticed one particular Turnkey Company out there are advertising a $300 cash flow per month for one property, after all the Operating Expenses they estimate are accounted for when financing a property with them at 20% down, 30 year 6% rate. That appears pretty good, right? Well... my question is this:

They did not include Vacancy (5%), Maintenance (5%), CapEx (7%), and the first month's rent they take (averaged out to be $66/mo first year) into their calculations. If I actually go ahead and subtract each of these amounts from the Cash Flow, it winds up yielding only $60/month. 

Is THAT normal? Is this a trick being performed by the Turnkey Company to "pad the numbers", or do most companies calculate cash flow & CoC return without accounting for Vacancy, Maintenance, CapEx, Other Fees?

Thanks!

Justin