I included all expenses, maintenance fees, and a healthy repairs reserve (which I have never came close to using in 4 years) to calculate net cash flow.Numbers are below:Property #1: Equity = $202,815 Net Cash Flow = $10,270 ROE = ~5.1% {~56% LTV}Property #2: Equity = $103,284 Net Cash Flow = $6,109 ROE = ~5.9% {~57% LTV}Property #3: Equity = $90,588 Net Cash Flow = $2,475 ROE = ~2.7% {~61% LTV}What do you guys think of these ROE numbers?

(Just nod, smile, and wait until they're done telling you what an FHA mortgage is and where the light switches are in your own house which you bought on an FHA mortgage.)

Vacancy rates are up of course, but I believe rents should be dropped accordingly (If you can cash flow at more conservative rents then you'll be fine).I wouldn't expect property values to increase on the trajectory that they did during the bubble, they will increase in a more modest and healthy manner and will increase mostly due to the pressures of inflation which will grow much stronger over the next 2-3 years.The real estate bubble can be likened to a stock bubble and other bubbles, but real estate as an asset is quite unlike any other asset in that it is a home where people live, it is a limited resource (land), it is part of the American dream (which may be altered now), and it is a nessecity to live (shelter).

To say that took a toll on my health is an understatement.

@Ian Ippolito, Your last post put a smile on my face.  

Look for healthy calendars with lots of bookings peppered in. 

The town zoning will not allow us to separate out the cottage from the main home.The owner is 75 years old an his health is not great.

I have the entire financial prospectus, but firstly I wanted som initial feedback if anyone knows the area or have done similar deals.The developers are expecting a healthy 18% IRR.

I've been able to get a healthy combination of both cashflow and appreciation from all my properties after a little TLC. 

Anytime you can net healthy profit and remove unknowns and liability that's a win in my book.