I tried to be conservative.Purchase Price: $45,000.00Purchase Closing Costs: $3,000.00Estimated Repair Costs: $5,000.00Total Cost of Project: $53,000.00After Repair Value $50,000.00Down Payment: $9,000.00 Loan Amount: $36,000.00 Amortized Over: 30 years Loan Interest Rate: 5.00% Monthly P&I:$193.26Rent $700.00 Total Income $700.00 Vacancy $70.00CapEx $70.00Property Taxes $51.08  Repairs  $70.00P&I 193.26Total expenses $454.34 Monthly Income: $700.00Monthly Expenses: $454.34 Monthly Cash Flow: $245.66 Pro Forma Cap Rate: 9.94% Purchase Cap Rate 11.70% NOI $5,267.00Total Cash Needed $17,000.00Cash on Cash ROI 17.34%   

If they pay water etc. take gross scheduled rents and knock off 60% expenses.91,020 X .40 = 36,408 NOI10 cap  364,080 sales price with no additional deferred issues. 3 5 units you are dependent on surrounding buildings and how they are run versus owning a whole complex.I will not even go into the additional steps as this property is overpriced junk.At the sellers sales price it is almost a true 5 cap for low end rentals per door and write down repairs needed to other units and likely a 4 cap.

For instance, I've talked to one guy in particular from loopnet who advertises 25% cap rate and then on the phone he's sort of like "well.. you know... it's more like 18%"  Don't get me wrong, 18% cap rate is amazing, but why lie about something so fundamental on loopnet then tell me something else on the phone?

Gotta get to that sweet long-term cap gain rate  vs ordinary income!  

You can have up to two as long as they are under a certain cap.

Also, I am approved for my fourth loan and currently capped at the number six.

I do not see tremendous long term upside appreciation potential in Palmdale in spite of the nice and true things you mentioned ... just too many empty buildable lots to keep a cap on pricing.

That final cash flow number for me takes into account most expenses that I can think of: PITI, 10% mgmt fees, Umbrella insurance, Home Warranty, and 10% Cap Ex savings, estimate 2 month vacancy rate for each unit each year, and it also assumes that tenants are paying the utilities (although there is a line for utilities in the property analysis tool that I use).

Keep it because it cash flows alright for her, but be sure to start putting away some of that money for CAP EX and repairs until she has about $12k in reserves.

Would like to know the current market cap rate for such Class C properties?