You need reserves to hold properties.Your area market vacancy is relevant to cash flow assumptions but not to reserves or holding costs.Consider these aspects;Tenant has a crack party and they get busted and the health department shuts you downFire damage, you don't get an insurance claim paid the next day, I never did.

I would show the owner & broker a sample letter that states something like "...the resident needs to be aware of the fresh water and sewer line "issue" connecting the chiller and boiler and that recent repairs were done by unlicensed contractors, without city permits or approvals and, as a concerned citizen, I could not in good conscience stay silent about such a grave risk to the tenants health...." 

Las Vegas city health department advised me they had multiple dealings with the previous owner and had instructed him to fix the plumbing problem.It seems undeniable that the owner was fully aware of the existence and severity of the plumbing problems.If 'the problem has been fixed' as is stated in the SPD, then can we have receipts to show this?

Another aspect investors need to be aware of......anticipating again, is when an owner has a buyer and folks call us to put a deal together, if you're not a Realtor you can be on thin ice as you have no interest directly in the transaction, there are other issues too, the unauthorized practice of law is a favorite for prosecutors.

I said "excuse me, did you notice how horrible they're keeping their apartment, it's on the verge of me calling the health department on them" He said verbatim "not my problem" I had to get rid of all of the Section 8 and start over.

I look for partner splits, health issues, divorce, owner wants to retire, owner needs to focus attention on larger properties they own not doing well, death, etc.The business is established a long time and the good price is coming from the sellers need and NOT that the business isn't sound or it's taking a dive.

@Sam Hodgett  I remember that too!  The

I've set a goal for us to own our first rental 1 year from now, foregoing any crazy expenditures with our own house or health of course.I hope to learn bunch here, and hopefully build some connections with fellow investors here in Indianapolis.

Can you make it part of your deal to have the seller remove it before close with a clean bill of health?

The health issues are many and "proven".