Lots of extra items compared to SFRs for lawn, common electric, water/trash, higher turnover, offset by economies of scale to some extent, so 50-60% for expenses is reasonable.The 12% net yield (cap rate) on 50x rents (135K puchase price) and 50% expenses, combined with 25% down and 6.5% 15-yr commercial financing gives you:Pre-tax ROI = 29%After-Tax ROI = 24% (30% marginal bracket)Yr 1 Cash Flow ROI =12% (net of principal reduction)... so you put in $34K and have CF of $4,050 in yr 1.

Lol, Travis, That day is coming soon and don't be surprised when you get that fat check for the tax deductible donation I make in your name.

The beauty of long-term cash flow is a reduction in volatility.

The lender will always specify that the Loan to Value percentage is based off either the purchase price or the appraised value, whichever is lower :( So as many have said here already they will not allow any reduction in price to be considered. 

They were asking $120k, I had seen that there was a price reduction from another agent for the same property to $115k. 

(Besides a huge reduction in cost)Is it wise to have the idea of a complete demo and remodel?

however it sounds like you have some sort of outlier project were advanced knowledge of the end sales prices was not possible to establish with any certainty .One thing we all have seen if your in the RE brokerage business though is homeowners interview 3 realtors.. and they list with the one who told them the highest price.. happens often.. and there is no question some realtors will high ball in the hopes of getting price reductions as time goes on... instead of being realistic out of the gate but stand a chance of not being picked as the agent to start with.

Presuming no other reductions to the capital gain it could be $700,000 minus $125,000 equals $575,000 capital gain for which the tax could 20 to 23% or $115,000 to $132,250.You could save a ton of taxes and not have to do a 1031.

After working on other FM/HP deals, I'm finding that if you drop all contingencies (except title), they will take a reduction in price.

Is like having a big fat savings account and you only pay interest when you use the money.