Residential Income Property AnalysisProperty AssumptionsPurchase Price$110,000Down Payment$22,000Loan Term15 YearsInterest Rate4.00%Principal & Interest Payment$651Closing Costs$0Gross Scheduled Income (GSI)$18,000Vacancy Rate7.00%Number of Units1Pro-forma Income Statement & Cash FlowGross Scheduled Income (GSI)$18,000Less Vacancy$1,260Total Actual Annual Income$16,740Other Income (Laundry, Late Fees, etc.)$0Gross Operating Income (GOI)$16,740Annual Opertating ExpensesAccounting$300Admin/Bank Charges$0Advertising$0Electricity$0Elevator$0Gas$0Landscaping$0Legal$200Maintenance & Repair$2,000Payroll taxes$0Permits and licenses$0Pest control$0Pool$0Property Insurance$440Property Management$0Real Estate Taxes$3,850Security$0Telephone$0undefined$0Tenant buyout$0Trash$0Water$0Other$0Other$0Total Operating Expenses$6,790Net Operating Income (NOI)$9,950Annual Debt Service (mortgage payments)$7,811Before Tax Cash Flows (BTCF)$2,139Key Operating RatiosCapitalization Rate9.05%Cash on Cash (COC)9.72%Gross Rent Mulitplier (GRM)6.11Net Income Mulitplier (NIM)11.06Debt Coverage Ratio (DCR)1.27Expense Ratio (ER) Per Unit40.56%Price Per Unit$110,000Here is a link to the property:https://ithaca.craigslist.org/reo/4827978957.html   

But remember, that information should be in the form of tax returns, bank statements, bills, receipts, rent rolls, etc -- don't just accept a written pro-forma from the seller.If you can't get that (for example, if it's an REO), then you need to contact an insurance agent, the utility companies, the county (for the property tax info), etc.

The safest way would be to form a new LLC or purchase a existing LLC using SDIRA money to purchase units and non-linier relatives' (parents, grandparents, children, grandchildren) money to purchase the rest of the units.

Some keep great records and others not so much.Looking at schedule E tax returns give insight into the numbers.When you inquire on a property and the seller says I haven't been keeping the records up the last year or I filed an extension those should be immediate red flags.My biggest pet peeve is words in listings like POTENTIAL,PRO-FORMA,POSSIBLE returns etc.

I was it many times pre 08... out of area buyer gets into rental sold by marketer in LA and actually got cash out at refi.. with the promise of 100 a month cash flow.. well expense's were always far more than pro forma  and the cash out at refi went to buy a Jet ski...

I'm getting some variance in pro-forma numbers though mainly in the expenses.

From my reading, I need to form a more formal "business" if the FAFSA college financial aid form is to consider this a business as I do, rather than just assets.

I can only imagine the lines that are blurred when some turnkey company is sitting on a "challenged property" and some chump from 1500 miles away thinks the pro forma looks great.

The pro forma numbers shown are:- Principal & Interest $783; Property Tax $229; Home Insurance $55; HOA Fees $266.Of course, that's if you're only putting 20% down (which is what many/most good investors often limit their own cash to), but you could deduct $783/m from your expenses if paying all cash.But the common consensus around here is that it's ALL about leveraging your cash, NOT using it all up on one deal when you could be leveraging it over 4 or 5 similar (but not cash negative) deals!

I don't know...I've seen folks with money do worse....like sell or take equity from their prime coastal properties and invest in OOS properties that cash flow well per their pro-formas but are generally occupied with tenants who have a special affinity for trashing the properties they occupy.