Plus the 20%-30% more in gross revenue just goes towards utilities, furniture, etc.

These are NonQM loans that underwrite by using the gross cashflow (as evidenced by net deposits in your bank account or how much was reported on your 1099) and then applying an expense ratio (usually 30-70%) to determine your gross income.

If your giving away 30% of Gross, that severely eats into your potential profits. 

Here's a breakdown of the situation:Current Occupancy: 80% (16/20 units occupied).Current Gross Rent Roll: $14,265/month.Market Rent Potential: $17,665/month (100% occupancy).Renovation Needs: 15 units require full renovation ($10K/unit), 4 units are 75% renovated ($2.5K/unit), totaling $160K in renovation costs.Vacancy Loss: $41,820/year in lost income due to current vacancies.Cap Rate AnalysisThe seller lists the cap rate as 9.59%, but this is based on the projected NOI of $119,858 (assuming full occupancy and market rents).

I use $2500 to pay expenses and save what's left in a fund for repairs etc...So I can count on approx 5K/month in gross income. 

I have 2 options:- finance the construction pre-selling the apt, and take my profits (expected to be around 700K pre-tax); or- finance the construction with a 6-7%/year loan (collateral = my house), keep the 10 units, and once the building is completed in 24 months, rent them for circa 180K/ year gross.

Originally posted by @JD Martin:Originally posted by @Anthony Dooley:@Ali Boone a property that is owned free and clear, has no debt therefore you get to keep more of the gross rent.

I won't proceed on a property if I don't believe I can hit a 10% gross yield.

The markets offer low to medium gross yields that max out around 7% if you buy in todays market.

Im self employed, roughly make $130k gross anually, 1099 NEC , no debt at all, 740 credit score.