However what happens when the tenant vacates and now the unit has to be turned over/takes a few months to find a new tenant and during that same period of time the sewer line goes and you get hit with that $15,000 cap ex expense in addition to the vacancy and turn over costs.

., Purchase Price: $475,000 ($197.9/sq. ft.).Estimated Market Value: $402,000 ($168/sq. ft.).Financing Terms: 2% interest rate, with a 9-year balloon.Unit B Income: $2,049/month (Section 8 tenant through November 2025).Unit A Income Potential: Similar rent or higher; Section 8 cap for the area is $3,234/month.Monthly Loan Payment (P+I): $1,386.Cash Flow Breakdown (if both units are rented at $2,049/month):Gross Rent: $4,098/month.Vacancy (10%): $410/month.Operating Expenses (37.3%): $1,376/month.Net Cash Flow: $943/month.Key QuestionsWould you be comfortable paying an 18% premium for financing at 2%, especially in a market where current mortgage rates are closer to 7%?

Rent, Expenses, NOI, Cash Flow, COCR, Cap Rate, Market cap rate. 

That could be achieved without spending an inordinate additional amount in cap ex; In fact all I have seen had these items in common1.

It should have some sort of a cap - surely they aren't taking 15% of a roof repair or expensive plumbing repair...The management fee of 10% during selling is also ridiculous - are they taking a commission when the property sells?

This is because there’s a cap on how much someone is willing to pay to rent a home today.For example, even if you own a solid property worth over $600,000, the maximum rent you can charge in my area is $4,000 per month.

At a high level, real estate will make you about 9-10% (a 6% cap rate plus 3-4% in appreciation). 

Everything ,all areas have doubled, tripled quadrupled or more even parts of EAST Cleveland, over the last 10 years on top of the 20-25% net caps All the best 

For rentals, focus on cash flow and metrics like cap rate (target 8%-10%) or cash-on-cash return.

The higher the cap rate, the more risk involved in the building.