Your tenant pool to select from will be small and that will mean longer vacancies if you have demanding criteria for acceptable renters. 

Be aware.I bought 4 units on a Friday and by Monday I had 3 vacancies.

Normally this list would include the PI part of PITI (Princinple, Interest, Taxes and Insurance).TaxesSewer and WaterTrashHeat/UtilitiesHOACap Ex and Ops (I always budget at least $150 per month per roof)InsuranceMgmt Fee - as a % (general consensus here on BP is 10%. include it even if you think you are going to self manage)Vacancy- as a %. (8% represents 1 vacant month/unit/year)

My monthly note for all three together will be $1100.They all rent for $1000.00 eachAfter figuring up ins, taxes, vacancy, maintenance, and trying to shoot above cost for everything I believe this is a fair deal.

If the rent is higher and gets fewer qualified applicants, you could have a month or two of vacancy.

Here are the details.Asking Price $275,0008 Unitsbuilt in 1987All are 2 bed/1bathRent is $500/month per unitOwner pays water/sewer/trashFinancials:They were not provided in the listing, so I am estimating on some costs.Down payment $68,750Closings Costs $10,000 (estimate)Mortgage Estimate $1361/month (estimated 5 year balloon, 20 year amortization, 5% interest, 25% down payment)Annual Gross Rental Income $48,000 ($500/month * 8 units)Vacancy Loss $4800 (10% estimate)Adjusted Gross Income $43,200Property Taxes $3018 (2013 actual amount)Insurance $1500 (estimate)Maintenance $4320 (10% Adjusted Gross Income)Water/Utilities $5760 (estimate $60/month per unit)Property Management $4320 (10% Adjusted Gross Income)Net Operating Income $24,282Operating Expenses $18,918Annual Income $12,468Cash on Cash Return 15.83%Am I underestimating key costs here?

., Mtce - $8k   - Vacancy 10% - $4kAnnual Cash Flow             +$22kBased on my numbers, it passes the 2% rule, but please let me know if I've missed a glaring costly item.  

I like to look at:TaxesSewer and WaterTrashHeat/UtilitiesHOACap Ex and OpsInsuranceMgmt Fee - as a % (general consensus here on BP is 10%. include it even if you think you are going to self manage)Vacancy- as a %. (8% represents 1 vacant month/unit/year)

You're still going to have management (figure 10%), vacancy (figure 8%), repairs (everything on the inside will account for the majority of repairs anyway), capital reserves (this will be lower but you still have water heater, hvac, cabinets and other high ticket items that depreciate), property taxes, and some insurance (you will need liability and contents insurance.....the COA policy will generally only include the drywall out).  

Just be prepared for a long vacancy.