It's better suited for investors looking to retire sooner or with larger cash reserves.

That's assuming a conservative 15% Cap Ex reserve (it has a new roof and 3 of the 4 a/cs are 2 years old) and 10% maintenance reserve.  

Always have necessary reserves for unforeseen expenses especially if you're doing a rehab.

I recently purchased a 4-plex for 170k with 2600/month in gross rents and after expenses and capital reserves my COC is just under $800/month.

He's asking $95K with around $25K left in rehab costs and rents around $1890 being conservative.If I add in property management 10%, vacancy of 10%, and capital reserves of 10% of gross income, it should cash flow at $125 per door.

What are the reserves like for repairs, maintenance, and CapEx?

@Dayn Beals I just canceled the contract and am waiting for the confirmation letter.

@Curt SmithI'll make a really broad statement, if you do want to do one or two sandwich lease option deals a year it's not a big deal as far as being licensed, this is only my opinion but I think most "departments of real estate" could care less of 1 or 2 dealsThe big point I'm trying to make is if you want to do 50 to 100 of these deals a year, there's no way around not being licensed in most states because you're acting as a major business operation, there is a pattern of similar business activityAnd I've said this over and over, all it takes is for you to get a negative reputation at the department of real estate in your state which will stain your reputation from being licensed in the future; all it takes is one real estate broker to write a letter to the commission and now you've got headachesIt's prudent just to get licensed and build a business you can be proud ofA sidenote:  I think a lot of people on BiggerPockets think that if you are licensed it stops you from doing creative deals,  that's not true at all.Regarding sandwich lease options on nice houses in nice areas, Dodd Frank excludes your relationship with the owner as an investor, if your subleasing and sub optioningI think there's a great opportunity for you getting rent credits and doing creative contracts with your owner as an investor with sandwich lease options, but don't be broke and not have some reserves like 3 to 6 months in case the tenant buyer doesn't pay you when you sub option and subleaseAnother issue is be careful of who you let into the house and make sure the tenant buyers  work on their credit and save money for down payment and they truly want to be homeowners.

I bough my first rental (duplex, non-owner occupied) 2 years ago and would appreciate feedback on my replacement reserve amount, and thoughts on needing flood insurance in a non-flood plane.

This auction has a reserve, also a buy it now price.