In order for deals to pencil out, we either need to see a decrease in rates (which seems further out rather than sooner) or a decrease in asking prices.

If there is a deep recession/depression where the unemployment rate rises substantially, and demand decreases, resulting in much lower annual rents, then look out below.

> Any sense at how much rents would decrease if we don't "cabinify" the units?

As others said, you chose to finance over 15 years which increases your debt service and further decreases cash flow.

Multi-family only outperforms in B areas or better, unless you are local or heavily involved thus finding ways to control more factors.SFRs average out to have longer tenancies, which decrease your largest expense - vacancy (and turnover repairs).

Other than depreciation being a noncash deduction, you really don't want to be losing anything...Real estate investing isn't about decreasing your W2 income as its about INVESTING and generating wealth over time or generating cash flow.

Typically you will see an increase in leverage & decrease in rates after you can show 3 completed rehab projects.

Ultimately alert investors should understand that as risks go up and if rewards stay flat or simultaneously decrease, that there are many variables for that; some controllable, some not and some are equitable absorbed and some not quiet as much.

Here's my argument (and yes, I am aware that this makes me a bear on real estate prices in 2023 - I believe that prices for residential real estate - 1-4 unit property - will decrease 5-10%, in line with Dave Meyer's projections.

Since this transaction involves 3 entities, it's not clear to me how equity is increasing or decreasing for the buyer and seller over time?