Ask the tenants to confirm the reported rents on the rent roll (i.e. get estoppels).Verify the rents aren't more than 5% above market rent for comparable units to ensure that as units turnover, you can re-tenant and maintain your cash flow. 

That's after including a healthy vacancy and maintenance reserve in your operating expense budget each month. 1% deals usually don't meet this criteria.That efficiency unit looks filthy.

So I have to save my cash for the rehabs and reserves for the bank.

Your comments just confirmed that I need to see like 8 other GC's. 

One thing to note is that we're using 14% total capex and reserves -- which might be conservative for this property.  

@Jennifer Turner Not sure of conventional loans for 5% down or less, but I can confirm that FHA/ FHA 203K loans are not simply for first time home buyers You’re just not allowed to have more than one owner occupant loan at the same time.

Will you loose sleep if the market overreacts to a .25 basis point move by the federal reserve?

@Wayne Brooks That was my issue, the owner is trying to pass off an issue or problem to me.Thank you guys for confirming what I already thought, I dont know what he's hiding but he does own alot of properties and mentioned doing this type of transaction for a few other property he sold.

If you need to buy using FHA, and owner occupy,  your finances are already strained - in the context of such a big purchase - and with a large PI and MI, can you afford to build solid reserves? 

Account Closed thank you for the confirmation!