I'm thinking if I can pay them a lump sum to leave I'll be ahead of the game if I don't have to have a couple of months vacancy on a more expensive renovated unit every 12 months.This area is gentrifying, think Bushwick Brooklyn.

Now I'd be looking for Sept vacancy and what if he wants another month or two because the project when over on time (that's never happened before-right).

I figured after maintenance and vacancies, I would still have some positive cash flow, since occupancy rates are good here, in Jersey City and labor is not expensive for maintenance

I punched in $600/year for each of those and got these numbers on your place: Mortgage Rate 5.00% Length of Mortgage in years 30 Monthly Mortgage payment $0.00 Taxes $ 50.00 Sewer and Water $ - Trash $ - Heat/Utilities $ - HOA $ - Cap Ex and Ops $ 150.00 Insurance $ 50.00 Mgmt Fee $ 60.00 Vacancy $ 48.00 Total Expenses $358.00 Total Revenue $ 600.00   Cashflow/month $ 242.00 Cash on Cash Return 14.89%

It's close to downtown, and a major university in my city.It's a duplex with a 4 bedroom and a 1 bedroom, and I plan on living in the 1, and renting out the 4 bedroom, or possibly filling in a spot in the 4 bedroom, if money is tight.What I'm wondering is how can I account for vacancy with the 4 bedroom unit?

You can find properties that are dirt cheap and have sky high theoretical returns, but they are in rougher neighborhoods, and your vacancy and cap ex reserves will need to be higher.You'll find other properties where your acquisition cost is higher and your return is much lower.

One vacancy will be filled quickly.

You have intimate knowledge of the building and the surrounding area, which is a rare advantage in this business.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)

By my analysis that is a 25%+ cash on cash return, assuming the total cost of buying it and renovating it (count vacancy) is 200K, you put 25% down and you get a 5% interest rate.

And it's in an area with no buildable land, lots of spillover higher rents from nearby areas, and very high rental demand, with essentially no vacancy.