The IRR is an annual return which is comprised of the annual cash flows (9-10% per year) plus two equity components, debt pay-down and appreciation.

Jamie,you have some details correct and some mixed up a bit - let me help.There are 4 components to a property - let us use a single family home as an example.There is the house - bricks and sticks.There is the deed - who owns the propertyThere is usually a note and mortgage - the Note is the promise, the Mortgage Secures the promiseThere is occupancy.Most people think these are all in the same and sometimes they are - in our instance, they are not. 123 Main St is the physical address.

But then UBIT may not apply on rental component of the income.

One thing you'll learn about RE investing - always expect the unexpected!

I would see if the agency can give a breakdown(unlikely) or break it down by component or number of liabilities you do have.

A key component of flipping is being able to find distressed properties and I know inventory of distressed properties is evaporating.

Forget the NNN component for a second.

Any hangups or unexpected issues?

If you run into an extended vacancy or only a few unexpected expenses this could turn out to be break even at best--at worst it is an alligator.

I think the owners are trying to price it high because of all of the work they put into it.With the owner financing component and the prospect of being able to maybe put very little money down, do you see any light in this tunnel?