I am sure rental yields are low given the kind of appreciation we are seeing.And is it ok to assume a 40% expense ratio (roughly 25% would be taxes and 15% would be vacancy and repairs).

I’ve looked at the numbers and feel pretty good that I can cash flow about $100 a month, after accounting for expenses, vacancies, etc.

With mortgage/Insurance/Taxes, maintenance, management, CapEx, and vacancy expenses I still make a significant free cash flow per month.

A vacancy and make-ready is way more expensive than a range, but if the tenant is one you don't care to keep then it may be something that you decide to stand your ground on. 

I'm just saying it isn't as good as you think it is.A more accurate (admittedly, not perfect) way of estimating cash flow is something like:monthly rent - 25%-30% (for vacancy, maint, and capex) - PITI = long term average cash flow.How is that for an answer to a question you didn't ask?

@Alexandre Marques dos SantosThat was exactly my dilemma, but after realizing the 25% down and closing costs and fees I would almost have nothing left as a safety net for any repairs or vacancies.

I also am totally responsible for maintenance, repairs and vacancies.

I considered taking the FHA route.Since I have the project managing experience my sights were set on a two bedroom one bath that I could make a three bedroom two bath down the road.Now taking this to a business level vs personal level- that's the basic backbone of the business.I can do the drawings, have experience with the individuals that handle permitting, and the process, and then can directly reach out to subcontractors as the owner of the property to facilitate the rehab and/or addition.My own research has led me to believe that rental rates (I also have personal experience with these) and low vacancy due to over demand should prop up this model effectively. 

. * Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)* Don't allow for your own independent property inspection* Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)* Require you to pay for any renovation upfront* Sell only in cheap. low end neighborhoods* Don't accurately represent the neighborhood/property classification* Don't have consistent rehab standards for all properties* Don't provide a scope of work for the property* Can't provide references of repeat investors* Require you to close before a tenant is in place

However I have heard about high vacancy rate; but I don't know these things and would like to know more things like this that I need to look out for.