My question however is what happens if an unforeseen cost eats up your portion of profit and begins to cross into your investors margin?

The first thing i would suggest is to get pre-approved and then try to get comps for the area on the specs of the property you are interested in, this should should give you a good idea of a starting offer.When you submit your offer, make sure you have good a contingency in place, in case of any unforeseen problems.

Its important to account for extra money in the beginning for unforeseen repairs (more then you're allotted 2k) on top of the down payment.

The city can also add many unforeseen costs when a building is vacant vs. occupied.

Unforeseen circumstances sounds like cold feet to me.

May hold off to see what unforeseen issues arise from this.

The cost of renting will eventually eat up that small spread through repairs, upkeep and the unforeseen.

We already know we will be successful and are ready to make this all a reality.A Plan…FIRST 30 DAYS WITH OUR TEAM1.We refine this list and add details.2.We will sign a partnership agreement with clear understanding or roles, responsibilities, and rewards.3.We will make 100 offers on properties on the MLS.4.We will have at least three funding options.5.We will have 100 leads from outside of the MLS.6.Meet regularly and share knowledge.7.From those first offers we will have one real deal to look at.8.We will stick to our numbers and analyze the deal.OUR FIRST DEAL1.Meets our numbers and close in less than 17 days.2.We will have rehab plan3.We will begin to market home for resale4.We will deal with the first unforeseen issue and move past with knowledge gained and a stronger team.5.We will close on the home quickly after we list it.THE NEXT THREE DEALS1.We will be completely freaked out from being in our first deal but equally charged up to find more.2.We will be able to move faster through our areas of responsibility3.We will begin to finish each other’s sentences and we have trust in the team.4.We will begin to refine our systems individually and as a team.5.We will close three more deals and take away knowledge and improvement from each of them.AFTER THAT1.Some of us will grow and move on.2.Some of us will take lesser roles3.Some of us will feel very comfortable with each other and formalize a company that is doing 5 to 10 rehabs a month.4.We refine our actions, write it down and repeat in another area, maybe Santa Clarita Valley or the west side.5.We have truly changed our lives in a positive way.Well thanks for making it this far.

I will admit, sometimes these bills have unforeseen consequences outside of their design but this bill is pretty acute in its focus.

Maybe these types of returns are more common there but 8% is just really low and doesn't leave much room for unforeseen expenses.