Led by a professor who brought personality to finance, it was no surprise to hear that he worshipped real estate (& stock options, but that's for another forum) and I caught the contagion.Since graduating, I've decided to continue my education on Youtube, reading various self help books (Think & Grow Rich, Rich Dad Poor Dad, etc.) and finally finding BP to complete.

So I had a  good conversation with an advisor at MemphisInvest and had her send over a number of sample deals.On the phone, when I asked about cash-on-cash returns, she told me on financed properties I could expect 11%-15%.On their actual spreadsheets, these were actually numbers for ROI.However, in digging into their spreadsheets, I noticed a number of glaring omissions from the calculations: - closing costs excluded - vacancy factor excluded - maintenance reserve excludedWhen all of these things are included, the actual cash-on-cash was less than 25% of their stated returns, and although I did not bother to calculate the ROI, I would guess the true ROI is about half of their stated ROI.The response I received to my questions about this were - since closing cash is a one-time thing we do not include it - only fixed costs are included so vacancy and maintenance are not included in their calculationsHonestly, I was quite surprised that these basic things were not included in their calculations.

Surprised so many new folks try this first.  

@Noah McBride The worst thing to happen to an investor is to not have sufficient cash reserves to get through some surprises and just plain bad luck.

You might have to ride it out for a few years but if you plan for it, it won't be a surprise.

I feel like I am getting surprised by all random charges.

IE what looks best on paper.. and forgetting that the market prices for risk.. you go for the higher cap rates your taking on greater risk should be no surprise there.. we see investors from low cap rate markets go through this learning curve all the time.. so with cap rates at 4 or 5 in those same markets I suspect the issue suddenly go away.. its the quality of the asset and the tenant base.. bottom line.. throw in city rules which can be researched up front.. 

Nothing should have been a surprise about it.

The big ticket items were obvious so no real surprises. 99% of the time when you go over budget it's usually because you change plans mid flip or something is uncovered during demo (rot, plumbing issues, structural and so on) .

The property had been vacant for ten years, took two years to rehab -- I wasn't surprised that a large family putting it to the test revealed a problem or two (nevermind the building passed every inspection, or that the contractors missed some basic stuff like no hot water running in the master bathtub.)