Look at if the water and sewer rates per gallon have stayed flat, gone up, or gone down the last 5 years.Water (liquid gold) you are looking at 60% expenses and not the typical 50%.54,000 x .60 = 32,400 = 21,600 NOIAt a 10 cap you are looking at a value of 216,000 for resale before commission costs and buyer concessions.At purchase of 150,000 and projected repairs being more 50k I don't see the value in this deal.

THE DEAL:Nice neighborhood in Chicago.Sell price 305,000Bank owned 3 flat with garden.3/1 and 1/1Will use FHA and put between 3.5 - 5% DP.Annual Gross income = 43,200If I use the 50% rule I am at a 7% Cap rate by my math.I will update the property ( it needs it - cosmetics - and is vacant now ) using some instant equity that will be built into the deal - will appraise at 360,000 as is - put 35k using that equity and increasing rents by 10 - 12%.Trying to close by 12/20.

I am looking for a 6 flat or bigger.

I believe the home prices will grow slightly but overall remain fairly flat.

I still dont get why people would buy 3flat. 1 big building with 3 units in it..all 2 BR ..1 in the "basement" we call it here in Chicago "garden apartment" - hard to rent, especially in winter. ...in OK hood such a 3 flat would cost say ...+220K to start.. either foreclosure or short sale.

This is flat out a bad deal for an investor.The second deal is very likely a duplex converted from an old house and then a second house on the same lot (as apparent from Google Earth).

Ryan there sometimes is a VA funding fee and other costs that are rolled in which is why they need the higher contribution.If you do small price drops you will be behind the pricing curve if the market is flat to declining.

Or flat out locked in till end of term.??

Some RE companies can offer you a flat price fee for just listing the property ( at least in my area), and you will be the primary contact for showings and offers.

A flat fee for listing the property and a commission offered the selling agent, and the sellers wanted to discount that too.