I have been building capital to the point that I think I'm ready to start investing and could use a bit of guidance on how to either take advantage of this hot market or how to effectively invest in neighboring, more reasonable ones.

The current owner is shopping it around for 1.35m (7cap) and the proforma numbers are as followed: ANNUALIZED INCOMEActual MarketGross Potential Rent $191,639 Less: Vacancy ($5,749) Effective Gross Income $185,890 Less: Expenses ($91,497) Net Operating Income $94,393 Debt Service ($65,592) Net Cash Flow after Debt Service $28,801 Principal Reduction $17,403Total Return $46,204 ANNUALIZED EXPENSESActual MarketProperty Management Fee $9,582 Replacement Reserves $5,250 Building Insurance $6,712 Maintenance $12,560 Taxes - Real Estate $36,296 (37220 w/o exception)Utility - Electricity $2,453 Utility - Gas $12,369Utility - Water/Sewer $6,275 Total Expenses $91,497 Expenses Per RSF $8.39 Expenses Per Unit $4,357I did some additional digging and found that they offer Wi-Fi for the building (I talked to a rep and said providing service for a building that size should run 285 a month) and the trash was left off which runs about 285/month.

This business , and If the seller or a lender is having any negative impressions that will effect how the deal goes . 

SO the effective date of reaching the 78% LTV (where you need to get to using market appreciation and principal reduction) will likely be a lot sooner than 6.5 years using principle reduction only. 

and the effect that has on the cash flow of the property.   

So you can do one of three things:(1) prepare a mock 1040 as you normally would as this will give you a high level of accuracy if prepared correctly;(2) review your previous returns and determine your effective tax rate, then apply that rate to this years earnings; (3) have a CPA do it.I get this request all the time so I've built a template for myself that allows me to quickly estimate a client's tax liability.

I also highly don't think that refinancing into a VA would be effective.

Once you do that then I believe you can fully dive it to a plan on how to execute effectively within that realm.Happy Investing...

. $495 x 6 x 12 = $35,640 gross income. subtract 5% vacancy and your effective income is $33,858.

If you want the quick formula for your SFR:PGI (potential gross income)-VCL (vacancy and credit losses)+OI (other income--laundromat, cable etc)=EGI (effective gross income)-OE (operating expenses)=NOI (net operating income)If you get financing, you do not factor that into this equation.