Then when that tenant left, I had to paint and do I few minor things for the next tenant, but that all came out of reserves too.  

@Albert BuiI meant 12% gross annual rents relative to acquistion price + rehab.12% cap rate is much different (gross rents - operating expenses not financing).operating is more than maintenance it can include capital reserves, property taxes, insurance, repairs, property management, lawn care, etc.

With everything I know about the property that is its pointing at but how do you confirm that it's a foreclosed property?

(at the auction) Saturday, February 20th.   9 a.m. to 12 p.m.Location: The Arcadia building, 12929 East Sprague Avenue, Spokane Valley, Washington 99216.This workshop will be FREE  for all who Pre-Register by TEXTING the word:  mccants  to: 72000, you will only be asked for your first name and an email address then you will be sent a coupon to your phone and an email confirmation with more information on the workshop.

If you are unsure how/who to do that, or how to word your due diligence contingency terms  (as well as that "ability to secure financing" clause), then your Offer would best be served as an understanding in principle - awaiting confirmation from your RE Attorney.

I am not offering an opinion about whether it is a leak or not just saying leak detection and confirmation of the other meter's accuracy could be achieved by using something like this.

And not just putting it in your spreadsheet as a monthly expense, but rather having that 5,500 bucks in actual reserves for these types of problems.  5,500 isn't a bad price either.  

Always good to have money set aside as reserves for unforseen issues as well.

If you HAVE more than 25% to play with (on top of the necessary extra reserves you need anyway), use it towards ANOTHER deal!

If the box still magically comes up with a number greater than 4.0, scam confirmed.