With rents at $475/month and assuming 100% occupancy and 50% expenses that gives you $28,500 NOI and a cap rate of 6.7%.Let’s assume you do nothing but raise the rents and still maintain a 50% expense ratio you get an NOI of 39,000, with the same 6.7% cap you get a valuation of just over $582,000, which is a difference of $157,000, not $262,000.Where are you getting an 11 cap and 26% cash on cash?  

The downside is because they are an investment and therefore higher risk, they usually require 20% down and interest rates are typically about 1% higher than home owner occupant loans.

I am considering adding occupancy sensors with a photocell on each landing as leaving the lights on for 10 hours seems like a waste.

@Chris MayHave you talked to a mortgage broker who works both with owner occupant and investor buyers?

They only provide pro forma not any actual finances, the rents are over priced on the proforma, and does not specify occupancy.

There are areas in some mid-belt states and cold belt states that were over retailed to begin with and with net migration moving away to cold belt states can leave an oversupply of available space to rent even if not much new development is underway.One tip I use to do with developers is drive around depending on rural, suburban, urban core a certain mile ring radius and see what occupancy looks like and locations for existing properties.

@ Rajah Morrison...the second and third unit will be rented for 1200 each...the total monthly income at full occupancy will be $4000...so I need to make a correction and say that it will be a 2% instead of a 1.8% monthly return. 

We are interested in the home as an owner occupant.

You should always take care of your family and put them first, which would include paying for their accommodation at such a massive event.I thought this was an interesting example of an investor making a decision based on soft information, rather than hard figures like MSA growth, break even occupancy, # of doors the sponsor has done in the past, or anything else like that. 

Increase occupancy.