I feel a little lost.Purchasing PriceHouse Price:$219,000.001% rule1.03%Immediate repairs:$15,000.00Cash-on-cash-2.71%25% Down Payment:$54,750.00Equity Line$52,000.00Cash$8,072.18Inspection Cost$770.00closing Costs$5,322.18Need at closing$60,072.18Estimated Income1st Floor 1 Bedroom$1,100.002nd Floor 2 bedroom$1,300.00Total=$2,400.00ExpensesPrinciple and Interest-$942.13Taxes-$290.83Insurance-$150.00Water-$40.00Trash-$40.0014 Love Lane Equity Loan-$430.00ReservesCapital Expenditures reserve (8%)-$192.00Vacancy Rate (8.3%)-$199.20Snow removal (2%)-$48.00Repairs (5%)-$120.00Income from Property:-$52.16 Thanks in advance!

Hi Beily, You're missing a few items from your expenses:Repairs (~7.5% of Gross Income) $4770/yearCapital Expenditures (~7.5% of Gross Income) $4770/yearUtilities, there will be some, if just lights in the hallways/outsideLawn care/snow removalTrash removal?

Their property may be "projected cashflow positive", but what happens if a big capital expenditure pops up?

I know capex = capital expenditures, so I assume you would want to allot an amount each month that goes into a pot for big things like windows, roof repairs, furnace replacement, etc?

You are correct - I'd be cash flowing at least $150 in my most conservative projections, while living for free and essentially escrowing my rent for major capital expenditures, vacancy, and future property management services.

Is there a large capital expenditure coming up soon (like less than 5 years left of the roof)?

You should be factoring in taxes, insurance, repair costs, capital expenditures, landscaping, and property management.

I've found you really can't go wrong with the 2% rule.It limits you to smaller and cheaper properties, which in the long run increases cash flow due to reduced maintenance, taxes, insurance, & capital expenditures.  

I think between 9 and 11% for a well-performing asset that will need little in the future besides 3-5% in reserves for future capital expenditures is fair.

Don't see those.Long term Capital Expenditures/emergency reserves: Big ticket items like roof/furnace, evictions, tenant turnover.