I spent the last 5 years  building a small business as the operator of an after school learning center for kids.

Just to be clear you will have to have adequate debt service coverage, usually 1.25 times the net operating income (not the rent) of the subject property.

We  actually make our vendors sign a code of conduct form of how they are to operate when dealing with our clients properties.

The current owner is shopping it around for 1.35m (7cap) and the proforma numbers are as followed: ANNUALIZED INCOMEActual MarketGross Potential Rent $191,639 Less: Vacancy ($5,749) Effective Gross Income $185,890 Less: Expenses ($91,497) Net Operating Income $94,393 Debt Service ($65,592) Net Cash Flow after Debt Service $28,801 Principal Reduction $17,403Total Return $46,204 ANNUALIZED EXPENSESActual MarketProperty Management Fee $9,582 Replacement Reserves $5,250 Building Insurance $6,712 Maintenance $12,560 Taxes - Real Estate $36,296 (37220 w/o exception)Utility - Electricity $2,453 Utility - Gas $12,369Utility - Water/Sewer $6,275 Total Expenses $91,497 Expenses Per RSF $8.39 Expenses Per Unit $4,357I did some additional digging and found that they offer Wi-Fi for the building (I talked to a rep and said providing service for a building that size should run 285 a month) and the trash was left off which runs about 285/month.

Hello - does anyone know if you can be an off-state resident (with no RE license) and take the RE license test and be licensed to operate in AZ?

Operating expenses include utility, payroll, landscaping, pest control, taxes, insurance, repairs and maintenance to name a fewThese are expenses, different from capital expenditures such as fridges hot water heaters and flooring.  

I live (and will be operating) in Michigan.

So just by looking at when he bought them, the price he bought it for and what it's listed for now and the condition every property is in tells me a lot about how he operated. 

I'm sympathetic to their situation but we are barely covering our moderate operating expenses.Should we?

I've been operating in all cash, and for various reasons can't take out a conventional mortgage.