I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Usually only commercial properties with established operational expenses histories are evaluated by cap rates and then those cap rates can also be applied to buildings in certain areas representing higher or lower risk areas.

You may need to lower the rent you are asking for by a bit, but it is way better to have a tenant using less water because they're the ones paying for it, than having them run the water for hours since they aren't the ones paying for it.

This sounds like a great strategy to me since this would substantially lower my down payment in a deal.

Problem was it's a common perk for Chinese restaurants to provide lower paid staff with room and board, and without the upstairs apartment, renting an apartment in nearby towns for staff is a problem with rooming house regulations beside a major expense.

How do you handle situations where ARV comes in lower than expected?

But depending on the magnitude that home price range would have to go lower. 

This is why we buy only in the suburbs of Milwaukee, even though prices are higher, but taxes are lower and overall you have better demographic pools to rent to.

Most of my really really high returns are in the lower end of that spectrum.Is there a delimiting factor I use, not particularly.

To be conservative, I assumed rents will be on the lower end of the spectrum.