Negative: the best achieved cash flow will be lower than more working class areas.

With a monthly payment of about $1600 that would be affordable for many middle class families with two income.

Then stress test your analyses to assume that the market will be worse at reposition (perhaps a .5 spread... really depends on the length of rehab... but .5 should cover most scenarios in this current environment). 

I would take the stabilized NOI and divide by the going cap rate in your market for that class and size of property.

What's the business environment?

Students are not a protected class, so I want to confirm if we can accept the rental application only from medical students here in New Jersey.Does anyone see any problems with such approach?

the home is in NJ. it's probably what most would consider a C class area. the tenant is an older school teacher that lives by herself.

I purchased this c. 1875 building in September from a slumlord for $520,000 ($43K/unit) and began what I knew would be a serious overhaul to double rents from $700/unit/month to the going market Class B+ apartment rate of $1300/unit/month. 5 months and $250K of rehab expenditures later, the building is completely re-wired and the 12 renovated units are tenanted at rents meeting my projections.

Pick a solid B-Class suburban area.

What class of neighborhood would you consider this?