If the building won't cash-flow at $100+/door (for something in the 11-24 unit range) once stabilized, I would consider it marginal and, unless there were other compelling reasons (land provided opportunity for further development; it makes a great forced appreciation play, etc), probably pass.

It depends whether or not you are trying to hit a margin.

Seems like there are so many people today looking for properties with great margins.

This is a low-margin business, it requires scale, and terrific systems.

A typical rehab for me is $15-60K, but I'd happily do a tiny $500 rehab if I could maintain similar profit margins.

There are other cost involved so margins have to be higher then someone who is local.

The numbers are with the current rent which is about $100 per unit below the market in that area.Leverage:90%Marginal Tax Bracket:35%Appreciation:2%Capital Gains Rate:15%Interest Rate:6.00%Value of the Land:20%# of Units2Total Square Footage1568ARV after Rehab:$100,000COMPARATIVE ANALYSISPrice Per Square Foot$57.37Price Per Unit $44,975Gross Rent Multiplier6.52Cap Rat/ROA7.97%PURCHASE ANALYSISPurchase Price$89,950Closing Costs2.00%$1,799Total Cost $91,749First Mortgage90.00%$80,955Second Mortgage0$0Down Payment$10,794ANALYSIS OF FINANCINGInterest Rate 6.00%0.50%Term in Months (n)360Amount Borrowed (PV) $80,955 Balloon Payment (FV) $- Monthly Payment (D)($485.37)FIRST YEAR OPERATING PROJECTIONIncome/ExpenseNet Rents $1,050.00 $12,600.00 Vacancies5% $52.50 $630.00 Advertising $- $- Cleaning & Maintenance $50.00 $600.00 Contingency $50.00 $600.00 Captial Improvements $- $- Insurance $50.00 $600.00 Property Management 10.0% (self managed) $105.00 $1,260.00 Property Taxes $180.00 $2,160.00 Water, Sewer, Garbage $50.00 $600.00 TOTAL OPERATING EXPENSE $537.50 $6,450.00 NET OPERATING INCOME $512.50 $6,150.00 Mortgage Payment $(5,824.39)Pre-tax Cash Flow $325.61 Tax AdjustmentsInterest Payment on Mortgage $4,830.26 Depreciation (affects TI not CI)$71,96080% of value/27.5 $2,616.73 Year 1 Taxable Income $(1,296.98)Pre-tax Cash Flow $325.61 Tax Expense $453.94 NET CASH FLOW $779.55 CASH ON CASH RETURN YEAR 17.22%My first thought is to Raise the rent to 575.That would bring cashflow up too 120 per month at 13.3%.

This keeps all the commissions within the office, and can be determinative at the margin, as long as your offer is competitive in all other respects.

Jeff.... interesting.I've always thought that starting a flipping business takes a lot more skill and ability than starting a RE transaction business.Which business is more profitable in terms of margin?

Yeah, for the next 5 years, maybe the payback is marginal - but after that you see the win.