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A cap rate is a reflection of the markets view of risk in the asset and market.

3) Does that reflect the wholesaler's projections?

That helps a lot because if it's permitted, it usually is reflected in these records.

If they deposit their tips in the bank we ask for bank statements that reflect consisten deposits of tips.

It's very possible that they built it unpermitted and just called it a shed/storage building so they didn't have to deal with all the bureaucracy and costs that come with permitting it as an ADU.If it was me, I would just continue calling it a shed and let the value of the property reflect that.

That's why, the payment schedule should reflect to the works which the contractor had completed.   

Meaning if the system has some flaws in in of when the money clears and that is when you consider it paid then you may want to change your lease to state that and reflect it.

The prices for homes seem cheap and I believe the crime rate is a reflection of that downside.

I make sure this is reflected in my lease.