Also, I am approved for my fourth loan and currently capped at the number six.

I do not see tremendous long term upside appreciation potential in Palmdale in spite of the nice and true things you mentioned ... just too many empty buildable lots to keep a cap on pricing.

That final cash flow number for me takes into account most expenses that I can think of: PITI, 10% mgmt fees, Umbrella insurance, Home Warranty, and 10% Cap Ex savings, estimate 2 month vacancy rate for each unit each year, and it also assumes that tenants are paying the utilities (although there is a line for utilities in the property analysis tool that I use).

Keep it because it cash flows alright for her, but be sure to start putting away some of that money for CAP EX and repairs until she has about $12k in reserves.

Would like to know the current market cap rate for such Class C properties?

They might set a lifetime cap on how many months of housing assistance a given person can receive.

I ran a DCF, increased NOI by 2%/ year, forced an 8% return, assumed id sell in 10 years at a 7% cap rate and came to something like $440,000.

Daniel Engstrom Hi Daniel,I'm not an expert so just info from what I would do...If your multi is 6 units it will be valued based on your annual NOI and local CAP rate.

If nothing goes wrong, the rent covers the mortgage with +88 dollars but when considering maintenance, cap ex, vacancy, I am in the hole. 

I valued the final property at an 8% cap.