The two factors make them less risky loans.

What am I missing/not factoring in?

If you go this route, it may be a little hard with the children and mother-in law in the house.You factored in a lot of the costs such as property tax, interest and likely principal.

Looking to my wife’s happiness and what’s best for our future family has been a huge guiding factor in my thought process.Yea I have kind moved away from the idea of being an agent or broker, though I may get my license at some point just to have personal access to the MLS.I do really prefer more personal face to face conversations so I like your advice about looking for local meet-ups.

My hunch is that the agent and lender both believe the house has too many health/safety issues in its current state for it to receive a clean appraisal with no conditions called out ... which means, no bank will lend you money for the house until all of those conditions get repaired.So, they are pointing you in the direction of a 203(k) FHA loan - which is a special type of FHA loan for properties like this that need to be rehabbed.  203k loans include the funds for both the purchase and the repairs; however, the repairs have to be completed by a contractor.The contractor needs to go first because their bid is handed over to the appraiser and factored into the appraisal to justify the full loan amount that you'd be getting.Good luck with everything!

Great point on the leveraged account Account Closed forgot about the factor with the credit limit.

Commissions are a cost and need to be factored in.

@Juan C VelezIt is cash going out the door that you won't see so I would factor it in the cash on cash calculation.You should also have a budget of this in your proforma's going forward.You should estimate how long tenants plan to stay for.I.E. tenants on average stay 3 years so you take that 1 month of rent as an expense and divide it by 3 and factor that going forward.

I know there are tons of factors but I think if a person is building enough units should be able to come up with an average.I’m thinking 40K per unit a person would be doing very well on a multi project.I haven’t hit that number yet but my projects have been smaller so property cost per unit were a lot more.Any responses would be great.ThanksSteve

It seems that there are some silent cap rate factors at play here that people are forgetting .