Determin net operating income (NOI). 4.

There will of course be expenses which will inevitably reduce this 12% annual gross income figure down to 6-7% most likely (cap rate - net operating income/price+cost).so to get your 10-12% cap youd have to have an annual gross of 18-20% which means 1.5-1.70% monthly gross income to sales price+ rehab cost, unless if you drove down from redmond to tacoma and did your own management, repairs, lawn care, etc.

Sherwin, if you have 3 units at 700 each, assuming 50% of gross income goes to expenses, that means a net operating income (NOI) of 12,600.

If there are you might not attract quality tenants as you cannot control how other landlords operate around you which is why I want full control of a development.

@David HuynhIf you are looking to finance a real-estate operating company using retirement funds explore the ROBS 401k as it will allow you fund your own business tax and penalty free using retirement funds. 

Data at rest in any store-forward operation is a real problem. 

I have run the numbers via Rental Property Calculator on BP and here they are:Purchase Price: $460,000.00Monthly Income:$4,200.00Monthly Expenses:$3,593.20Monthly Cashflow:$606.80Pro Forma Cap Rate:5.93%NOI:$27,952.00Total Cash Needed:$126,000.00Cash on Cash ROI:5.78%Purchase Cap Rate:6.08%Total Monthly operating expenses:Vacancy:$294.00Repairs:$210.00Water:$100.00Sewage:$100.00Insurance:$150.00P&I:$1,722.53Property Taxes:$916.67Misc:$100.00Please let me know if I am crazy to do this deal. 

@Simon Cox Looks like you have thought of all operating expenses.

Year1 Gross income $ 24,000 less vacancy $ 1,200 Total Operating income $ 22,800   Prop Taxes $ 4,237 Insurance $ 2,145 HOA $ 1,128 Maintanance (from gross income) $ 1,200 prop management $ 2,387 Total Operating Expenses: $ 11,097 Net Operating Income (NOI): $ 11,703 less mortgage expense: $12,835 Annual Cash Flow: $ (1,132) Monthly cash flow: $ (94.34)

In Texas PMs need to be licensed and being a Realtor VS being just a licensed real estate agent does carry additional operational requirements.