Originally posted by @Sean Kelly:
...gross rents for 3 occupied properties is $2150 (2 SFU and 1 duplex)
prob $500/mo potential rent on vacant home; needs work though to get it rented. lets shelve that property for this discussion though
net cashflow for 3 properties after tax, debt service, prop mgmt, tax, ins, 10% vacancy, 10% repairs, etc. is conservatively ~$650/mo .. 17.2% IRR assuming a 10% cap..
Are you only utilizing the cash flows (both current and FCF) from 3 of the 4 properties to evaluate the soundness of the $110,000 investment (all four properties)?
Also, you mention a cap rate of 10% but if you are assuming net cash flow of $650 per month (from all 4 properties) that = $7800 per year and translates to a 7.09% cap rate on the $110,000 investment.
If the vacant/unrehabbed property can rent for the mentioned $500 per month, net cash flow on that property = $151.16 or 30.23% of gross income. That then = net cash flow on all four properties of $9613.95 per year and a cap rate of 8.74%.
How are you getting to assume a 10% cap rate? Also, what the the market cap rate in that specific area for similar properties?