You should factor in time value of money and opportunity cost.  

I know we can start with DSCR and refinance, but then you're paying closing/origination costs twice.

In a world of constant inflation, maintaining your lifestyle over time requires an income that meets four key criteria:Rent Growth Must Outpace InflationIf a basket of goods costs $100 today, in ten years, with 5% annual inflation, that basket will cost $162.

Typical Project Management Fee for a GC General contractors (GCs) typically charge a project management (PM) fee of 10-20% of the total project cost.

., to 2.5x or 2.75x) since tenants won’t have additional out-of-pocket utility costs.

With 8% you should easily cover the heloc cost, and more to pay it off down the road.

The home the owner is wanting is reasonable enough for the cost to build the home would make the "cost" of the property to be bought at a discount.

Also, at this time I had seen properties selling for 10 – 20% over ask regularly.Interest Rate 30 year conventional 7%Homeowners Insurance = $1,000 annuallyRents = $1,800 per monthWhen I looked at those assumptions, I would need to put down $80,000 on this house to get it to hit my cashflow goal of $500 minimum per month which equates to 35% down.Total mortgage + escrow = $1,267.13 per month with rents at $1,800 my monthly cashflow is $532.87.From my experience, after taking out vacancy and maintenance costs you are left with around 73% of that total cashflow number once the rental is established.People have asked why a $500 per month cashflow goal.

Typlcally, a lender is going to lend 75% - 90% of the Cost of the project (property price plus rehab cost (scope of work)) or 70% - 75% of the ARV (As Repaired (as completed) Value).

Although the cost is high for these areas there is little new construction.