Investors use cap rate to estimate their potential ROI (return on investment) for a particular asset.In a simplified definition, the cap rate calculates a property’s natural rate of return in a single year by dividing its annual net operating income (NOI) by its purchase price.

Not only am I asking if the offer was priced right but I really would like to do a BRRR, plus this place can be an amazing AirBnb since the estimated rent is $3,500 in this area. 

Purchase price: $515,000 10% down= $51,500Loan= $468,135Rehab = $35,000ARV (estimate) 600,000-625,000.

My initial depreciation is based off of the purchase price, so if I am able to increase it does the new value have to be based on anything in particular (tax assessment, appraisal, zillow estimate)? 

I'm estimating a rehab cost of approximately $300,000.00 or a little more.

So, while they are not a common form of valuation tool for single families, you can technically estimate one.  

If you are wanting estimates vs checking current work they may change a little less because there is income potential.

While the true cash flow is by my estimations going to be exactly $1321.45 per month.

I am not sure about a rent by the room comparison vs their standard single family or small multifamily estimate, so I would check with potential lenders to see what they will consider.

We also estimate we would need to invest about 15-30k up front for painting/furnishing/landscaping/amenities in order to get it ready as a vacation rental.