The key is performing the proper due diligence when evaluating the property and the neighborhood it's located in just in case you have to take the property back.

Too often, myself included, we focus on just the math and miss out on taking in the WHOLE picture that might greatly effect our evaluation of the property.

When I say in the process, I mean we have secured lending, have evaluated and attempted purchase of 1 candidate (couldn't close the deal) and are now moving on to another candidate that we like.I've been reading around the forums about some of the financial evaluations and am working to understand why Net Present Value of free cash flows is not being used more in the evaluation of a property.It is interesting to understand the CoC as an income statement percentage and it is certainly interesting to do some quick calculations with perhaps the 50% rule.But until you take a series of cash flows, discount them by a Weighted Average Cost of capital, and determine if you can clear your next best alternative (stock market, paying down debt), how do you know if you really have a something that will make you money?

Prepare specific questions, visit with them on the job, evaluate their evergy, attitude and communication level, and decide if you feel comfortable.I'm not sure in your state, but most licensed contractors pay their own taxes.

I do a good job and always score big on my yearly evaluation.

Typical expenses on a commercial MF property is 40%- 50%, and part of that money goes to building your reserve. make sure you allow room for that in your expenses when you are calculating the NOI, and evaluating your cash on cash and ROI.

You have to be an expert marketer, negotiator and have an expert level understanding of your market & how to evaluate properties within your target market.3rd thing...define your target market and what your target property looks like.  

I did evaluate 120 Watkins, but realized that it is not a renovated property, but in solid, move-in condition.

Just identify your targets and be prepared to evaluate 100 properties before you find 10 you bid on, to get one accepted bid.

While that is a fake number since you dont know till you get it - but are people using 50% when evaluating numbers?