For this purpose, just divide the annual net operating income (50% of gross rent) by .09 as the high end, divide NOI by .11 as the lower end of your potential range.Also, ask an agent to do a BPO/CMA to provide a point of reference.

Then divide this actual cashflow into the "all-in" number to get your COC return.And for the cash scenario, you already mentioned that you cashflow is $5400, so your cash on cash return is:$5400 / $53,050 = ~10% (not 20%)I think the part you're missing is that the $5400 (in this example) is your "Net Operating Income," not your "cashflow."

This unit will rent for $650 per month.With $700 total in operating expenses and $2,100 per month coming in, this house will be generating $17k net income this year.

I think every new'b at some point thought just like that then eventually found it was a dead end and a major headache, including me.In contrast, there is a guy in Indy running an operation that buys 50 packs of these types of SFRs refurbishes them and sells them for 40-50k, and he is helping improve the area while profiting.

You'll have to be very dependent on the "turn-key" company to handle the day to day operations, so you want to make sure they have truly built a full-service company and that they are planning on sticking around.

The operating agreement should specify a procedure.

I just wanted to resurect this thread becuase Im zeroing in on what this will actually cost me and what type of income it would generate.Roughly it would generate $11,300/mo (4 3bed, 6 2bed, 6 1bed & Im operating on the conservative side for the rent amount).Expenses would roughly be debt service of about $6,600, $900 for property insurance, Its exempt from property insurance for 5 years (renisance zone), $700 in maintenance, and I would do all the property management.We are talking the place from the gutting phase all the way to turn key for a million bucks.

Most of them are small operations but they all have that really cool machine in their full size vans that seem to turn what appears to be a lost cause into something miraculous(sp?)

You should formalize that partnership with an operating agreement.

I have been told be careful not to pierce the veil and always have a notarize Operating Agreement that specifically stating that members cannot be required to put in more money and are not responsible for debts (although watch out for personal guarantees) or liabilities etc (many other things should be in the operating agreement beyond the scope of this post).