Rent roll, expenses, vacancies and any deferred maintenance that needs to be taken care of.

The best way to think about it is that you are trying to maximize CASH FLOW and mortgage paydown is just a nice side effect that causes you to cash flow more.One other point: the more money you pump into the property, the more money you risk losing if you ever default on the loan due to hardship expenses, high vacancy rates, or anything else that could come up to deplete your reserves.

Have you factored in vacancy as an expense?

The security deposits will be credited to you at closing.You will have a positive cash flow if your NET CASH FLOW exceeds your (pro rated) CASH OUT OF POCKET, ALLOWANCE FOR VACANCIES AND REPAIRS, COVERS YOUR INSURANCE, TAXES AND DEBT SERVICE.all cash

The biggest issue with builders risk addendums is vacancy issues.

•Area Vacancy Rate of 2.9%!!!

We're also kicking around the idea of raising a small equity fund based on the low vacancy rates and high subprime default rates.

You've already seen what a 25% vacancy on one unit does to your cash flow, and assuming the houses are similar house/similar market you can almost bet you're looking at rent roll backs in future.Assuming youf FMVs are correct I'd be out of these things so fast it'd make your head swim.

What the CAP rate is at any one time or any one market varies.There is still plenty of room for prices to vary based on what someone things they are dealing with (are the numbers real) and if they see room for improvement (change or use, upgrades, stabilize the rent roll if there is a high vacancy factor).Note that you rarely get actual expense number.

I may or may not be doing it correctly.Here is the info from the property:Financial Summary Proforma Year: 2007 Scheduled Gross Income: $89,100 Vacancy: $4,455 Effective Gross Income: $84,645 Maintenance: $8,800 Taxes: $8,015 Insurance: $3,500 Other Expenses: $5,925 Total Expenses: $26,240 Net Operating Income: $58,404 Debt Service: $49,500 Pre-Tax Cash Flow: $8,904 Expenses/Unit: $800.00 Unit Mix Information One-story units No.