It ignores vacant unit, clean up and marketing between tenants, eviction costs, damage, routine maintenance like the roof, hot water heaters, appliances, lawn care, snow removal, etc etc etc etc that are all real costs whether on an annual or some other recurring basis.In most places, if you can offer an investor a property with little deferred maintenance that is generating rents at 2% of purchase price, they are going to jump all over it.

But, by specifically stating a "Cash Flow" number that doesn't include these expenses, you ARE ignoring them.To not ignore them, your cash flow statement should be, for example:Cash Flow: $309 MINUS OPERATING EXPENSESAt very least, you should include a disclaimer to the effect of, "The Cash Flow and ROI numbers do not reflect the inclusion of operating expenses; actual cash flow and ROI will be lower."

.* Regular inspections to check for leaks, ceiling damage, make sure window AC units are properly mounted, etc.* Other preventative maint, such as cleaning gutters

The exception is things that are billed just once a year and that are effectively taxes.

As far as being a burn out (fire damaged) lots of rehabbers like these types of properties.

For instance, a goal in your plan may be 'building an effective buyer list'.

If you have a net operating income of $40k and the offer is $100k per acre for 3 acres the effective cap rate at the offer price is 13.33%.

You need to know your market, occupancy and competitive rent rates, renter expectations, your goals, risk tolerance, temperament, and your resources.You need to know your local tax rates, state/local landlord rules, housing authorities, insurance sources, financing options, occupancy and employment trends.There are crazy tenants but effective management can minimize the risks.Good luck.

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