For MF (such as 10+ units), we look at cash on cash of at least 5% day 1 and then 15%+ pro forma in cash flow thru value add rehab and/or management. 

I'm having a tough time calculating and projecting pro-forma on a Triplex opportunity shared by a local wholesaler... am i suppose to calculate those numbers based on a conventional loan or hard money terms??

ThanksPurchase Price: $40,000.00Purchase Closing Costs $2,500.00 Estimated Repairs $30,000.00 Total Project Cost $72,500.00 After Repair Value $80,000.00Refinance Loan Amount $60,000.00 Loan Fees Amortized Over 30 years Loan Interest Rate 5.250% Monthly P&I $331.32 Total Cash Invested $12,500.00 $800.00 Monthly Income $582.66 Monthly Expenses $217.34 Monthly Cashflow 8.23% Pro Forma Cap Rate $6,584.00 NOI 2 months Time to Refinance 20.87% Cash on Cash ROI 16.46% Purchase Cap Rate

That said, if you decide to go the turn In general, the ones to avoid are the ones that: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 inspectionAre 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 upfrontSell only in cheap. low end neighborhoodsDon't accurately represent the neighborhood/property classificationDon't have consistent rehab standards for all propertiesDon't provide a scope of work for the propertyCan't provide references of repeat investors Require you to close before a tenant is in place

But as you're now realizing, they'll be harder to find, because you'll be competing against owner-occupiers (ie. emotionally attached, getting lower interest rate, so will pay more) in those markets.Always keep in mind though that a pro forma cap of 6% for residential property will NOT assure you of a good "deal".Rule of thumb: WHATEVER the market value is carefully worked out to be, offer no more than 70%, maximum!...

should I go ahead and form a LLC?

I would really look to form a strong relationship with an agent who works with investors that really knows the areas--probably your best bet.

Last thing is to ALWAYS only offer based on ACTUALS, not pro forma.  

The newer nicer buildings look worse at  first but a true realistic pro forma based on life cycles of everything imaginable from carpets to refrigerators to roofs etc, paints a different picture.  

@James Chambers : obvious question: did you base your numbers on a pro-forma given to you by the seller/broker?