It looks like you are forgetting the soft costs in the equation.

changes the equation quite a bit.Also, you aren't figuring out your expenses properly. it is not as simple as saying "mortgage is x, rent is y, so cash flow is Y minus X." what happens when the place sits empty for a month?

That 15% in costs equates out to $15k in profit you won't get.

Hello BP,So I have a few questions, I’m trying to analyze deals just to get a better understanding of how to do it so I can feel more confident when I’m going into my first deal..Now I understand that when you’re flipping the Equation is ARV-rehab-fees correct?

@Terrenze Walker,Finding buyers is probably the easiest part of the equation. 

Morality is not part of the equation here.

Either the agent would not get paid (because you are not offering a buyer's agent commission, which is something to consider both sides of on your own) or you pay the agent 2.5-3% of the purchase price and just add that into your equation.

In this scenario, the cap rate analysis actually leads to a wrong decision precisely because it takes equity out of the equation.

Interest-only loans are running anywhere from 30-day LIBOR (currently at 1.67) + 350 - 600 basis points, which would            equate to approximately 5.17% to 7.67%.

If you look at every single fee as a cost, you'll miss out on opportunities because you only looked at one side of the equation.