Originally posted by Jon Holdman:...In descriptions of properties, brokers and seller often understand expenses and make the NOI look higher than it probably really is. ...I believe that this sentence should read:In descriptions of properties, brokers and seller often understate expenses and make the NOI look higher than it probably really is.

If you "fall in love with the deal" you're very likely to understate the actual cost of the work or overstate the ARV. 

They over-state the potential rental income or resale value and understate the repair costs.  

The power and importance of commitment cannot be understated.

Overall I'd say you've definitely understated your expenses, you'll want your Vacancy to be around 8% as that gives you 1 month of rent saved each year (1/12 = 8.33%), CapX should be 10% (not 2%), typically management companies charge about 10% (not 5%), and repairs should be at 5%.

I only saw 2 numbers - Gross, and expenses, and already it tells me that the expenses are understated and are way out of line with national averages = overpriced. 

They knowingly or unwittingly inflate the retail value, understate the rehab costs, have no ability to close on the deal if they do not find an assignee, who often times are as ignorant as they are, and, in short, give a very bad name to the industry as a whole.  

Most contractors understate valuation for the permits .

And, agree with others, you may be understating expenses a bit. 

I got some sensitivity training in this thread for agreeing with a comment made about a sucker being born every minute, but the truth of that can't really be understated, IMO.