I am a SCREA and at times Multi-Family appraisals could be subjective due to market cap rates, rents etc.

@Marty Gold I would think you'd want to put more than $400/year aside for cap-ex but that's just me.  

Nowadays, I get to enjoy a large monthly cash distribution in problem free months, but no cash flow in months with significant expenses...That makes a lot of sense to save using your model, but my question about your model is what do you use as your cap for replenishing your reserves?

So maybe knock off $10k per year which at a 10 cap would imply knocking off 100k on an offer sheet.Here's where I see the play: Lot rents $150, park owned average $375.

Cap rates will be 3-4% even if you put work into it and reposition to get rents up 40-50%.

@Gerald Thompson The 2nd Tier is just a fancy way of saying I'm getting a second home under the same 417K cap.

Now the deal...Financing:Potential purchase $80,000 per Duplex $16,000 down (20%)$64,000 @ 5% = $345/modouble this since there are two Duplexes$690/mo debt service for both DuplexesIncome:$26,400/yrEach unit is rented for $550/moExpenses:Taxes ~$4,000, Insurance ~ $1,600Lawn care/snow removal ~ $2,400Maint. reserves ~ $2,400Factoring a 7% vacancy (7% is conservative for the area)NOI ~ $14,152Cash Flow: $5,872$14,152 - $8,280 (debt service) = $5,872ROI: 18%Cap Rate: 8.8%COC: 40%$14,152 / $35,200 (downpayment + closing cost) = 40%3.

You will cap out relatively quickly on the conventional/residential side, but the commercial side should give you much more room.

Important difference is that the Annual has a 2% annual limit on rate increases, and a 5% lifetime cap.  

If you work with the right company, they can find you a property which is in a good neighborhood with good enough renovations so you don't have to worry about cap ex, repairs and vacancy for the first 2-3 years.