Both the GP and the lender can tell their investors that they won.To your question on how this is calculated, there’s no math formula, instead it’s more like that scene in National Lampoon’s Vacation where the Griswold Family Truckster gets repaired at the only gas station in the desert.  

Each of the 5 warehouses on this campus will require updates (construction of offices/bathrooms, roof repairs, paint, siding repairs, new penetrations for doors, updates to electrical, insulation, and extension of water and sewer). 

Since you just starting to rent it out I would include the down payment and any major repairs you have done.

How much will you spend in repairs on a 1920's house with renters ? 

As an example I was looking at a multi unit, smaller building and within 90 seconds of viewing the proforma I saw the maintenance/repair figures were "low".

I’ll also amortize large items like roof over 20 yrs, and then add $100/mo/unit for general repairs.

You will take care of repairs under say $200 or $300.

Seller is the Agent.Seller bought property in January of 2023 for $730,000Current “As Is” Value : $770,000Target Acquisition Price: $730,000-$780,000 After Repaired Value: $900,000Repair Estimate: $120,000Initial Offer Amount: $715,000Loan Program: Bank Statement Program.Total Estimated Monthly Payments (Principal, Interest, Taxes, and Insurance) $5500/month (based on $770k purchase price)Estimated Gross Yearly Income from Short Term Rental: $160,000 (65% Occupancy, $700 a night| (STR Listing Comparable properties Listing 1 Listing 2 Listing 3)Net Monthly Income after management and taxes: $11,751.25Net Monthly Income after Mortgage Payments: $6251.25 ($75,015) Per YearTotal Cash Investment: $297,000 ($177,000 in down payment and closing costs and $120,000 in repairs)Average Yearly Return on Investment: 25% yearlyAverage increase in property value per year: 5%Average increase in booking revenue per year 7.5%Property Value average after 10 years: $1.5 millionTotal Cash received over 10 years: $1.3 million.Total Equity multiple min over 10 years: 6x total return on $297,000 invested.

Common deductible expenses include mortgage interest, property management fees, repairs, and even travel expenses related to property management.

The turn will typically cost at least one 1 month rent and then the freshening/repair costs.