A few newbie questions

[Ken Morris]

1)How do you get accurate financial numbers on a potential property?

2)Who do you get the accurate financial numbers from?

3)What is the point of a pro-forma if the numbers are altered and made to look good? Why not just skip the pro-forma and get the accurate numbers and other needed information?

4)How do you know how much you should put away for reserves?

5)What is a good baseline cash on cash return to expect from potential properties? or is this dependent upon your area like vacancy rates and cap rates?

[Mehran K.]

1. 1 & [2]. Actual property tax bills[county assessor], utility bills (1-2 years)[from seller, or utility company once you have property under contract], real insurance quote [from your insurance provider], actual lease (compare it with market rents, also obtain previous rent rolls)[seller]. Any rehab/fixing that's needed, you can get actual quotes from [contractors] if you are unable to estimate them yourself. 
2. You could also compare these numbers with other local investors to check for any abnormalities. After a while, you'll be able to compare them with your other properties' numbers.

1. 3. I ask myself this same question every time I see a pro-forma. Be mindful that many investors haven't been exposed to the education we find her eon BP. They take pro-forma for granted and don't know any better to be scrupulous with them. The selling agent is obviously trying to fluff up the property for sale as well.

1. 4. For total amount to have on hand: it really depend on the property and what kind of shape it's in right now.
2.     For how much to put away monthly: I'd say 10%-15% of gross income.

1. 5. This is going to completely depend on the market you're in and what kind of financing(if any) if you have attached to the property. Too many variables to "expect" a certain CoCr in general. I'd say come up with your minimum CoCr(with a little research), and then find a market/properties that can provide those returns FOR REAL.