I keep a full year's worth of gross rent in reserves because I'm just risk-averse by nature.

I am thinking of investing in a syndication that is buying a 157 unit apartment project located at 3117 S 192nd St. in SeaTac, WA 98188.It appears the property last sold in 2015 for $1.8Mn….the syndicators now plan to buy this property at a price that is about 60% higher and around 10.8X trailing 12 months gross rental income or 9.7X gross income projected over the next 12 months.They plan to renovate the units and increase gross rental income by 11-13% in each of the next two years and then level off at 3% annual rental growth thereafter.

I am thinking of investing in a syndication that is buying a 157 unit apartment project located at 3117 S 192nd St. in SeaTac, WA 98188.It appears the property last sold in 2015 for $1.8Mn….the syndicators now plan to buy this property at a price that is about 60% higher and around 10.8X trailing 12 months gross rental income or 9.7X gross income projected over the next 12 months.They plan to renovate the units and increase gross rental income by 11-13% in each of the next two years and then level off at 3% annual rental growth thereafter.

Here are my numbers:$82k PP and CC$60k renovation (fully permitted)$3k holding and misc$145k all in$200k ARVRents range from $650-850 (of course I think for a brand new unit we'd command the highest rent)$55 gross profitSo if I went traditional I'd spend another 13k in closing and agent fees.When our investors fund the entire deal we share 50% of profits so why not find the end buy and hold partner in the beginning and give them that 50% discount on the property.

Gross income would be 5,200.

But much like the 2% rule for monthly rent or 50% of gross income going to bills we have these things for quick evaluation. 

If you're putting 20% or 25% down, you can waive the impound account entirely and pay your property taxes on your own when the bill comes, but this is just kicking the can down the road... your CoC ROI and Cap rate and all the other measures didn't actually change, you'd be "tricking" yourself if you calculated it such that they did.The same logic behind lenders using gross income for our math instead of net, for W2 people.

Here is the info, Price = $840k (6 units)**Gross Cap = 9%** *$75600 gross income* potential Brand NEW apartments!!

Assumptions: Lowest Appraisal Loan INCOME AND RATE OF RETURN Purchase Price 154,900.00 Loan Amount 123,920.00 Down Payment 30,980.00 Estimated Annnual Gross Rents 15,540.00 Estimated Annual Equity Paydown 1,700.18 Estimated Annual Principal & Interest ($8,350.19) Estimated Annual Property Taxes ($3,000.00) Estimated Annual Homeowners Insurance ($746.78) Estimated Annual HOA Dues $0.00 Estimated Annual Management Fees ($1,877.75) Utility costs to be paid by landlord (if any) Annual $0.00 Lawn mainteannce costs to be paid by landlord (if any) Annual $0.00 Indirect Vacancy Allowance Annual ($) ($155.40) Repair Allowance Annual ($) ($621.60) Misc. bucket for costs per month Annual ($60.00) Estimated Annual Net Expenses ($14,811.72) SUMMARY OF RETURNS Estimated Annual Gross Income $2,428.46 Estimated Monthly Gross Income $202.37 Estimated Annual Gross ROI 7.84% ESTIMATE OF CASH FLOW Loan Amount 123,920.00 Interest Rate 5.40% Loan Term in Months 360 Estimated Principal & Interest ($695.85) Estimated Monthly Taxes ($250.00) Estimated Monthly Homeowners Insurance ($62.23) Estimated Monthly HOA Dues $0.00 Estimated Monthly - MISC ($69.75) Estimated Monthly Management Fees ($156.48) SUMMARY OF CASH FLOW Estimated Monthly Gross Cash Flow $60.69

From a tax POV, it deducts costs of labor from gross receipts.You mentionted that you should cap the value of the property in the holding company at $1M.