This formula is MOSTLY used for fix and flippers, buy and hold (rentals) would care more about the cashflow or cap rate than the ARV.

According to the preliminary numbers, it is at about a 14% CAP.

I look for at least $100/mo after maintenance, cap-ex reserve, turnover, vacancy, management, debt service ect.

Now the cap rate is a less favorable 125,000/2 million = 6.25%."

CAP rate?

But for learning purposes, given that i just learned about cap rates, NOI, IRR, cash on cash etc.

It's a great investment property with a potential cap rate of 11%!

Next I'd find out how much I'd need to pay for the following items: Taxes Sewer and Water Trash Heat/Utilities HOA Cap Ex and Ops (how much are you going to save each month for everything from changing community light bulbs to replacing roofs) Insurance Mgmt Fee (as a %) Vacancy (as a %) If all of the above plus your mortgage payment (principle and interest) left me with $100/door/month profit AND 15% ROI (cash on cash) I'd start the negotiation process.

I'd jump your repair and Cap Ex expenses to $75 each.

It will cost me an extra $3500 to purchase windows that are brown, with grids, and with brown capping.