Hello Jack, It looks you are an international buyer planning to invest in Houston. 

The seller's agent negotiated the 8% to offer good cap rates to her international buyers and volume to the managment co.

Although, there are ways to go about doing updates to internals with tenant in however that would have to be worked out with tenant, as it would impose on them.Cash payments: had recently gone thru similar situation with a 6 plex.

@Antone JAmes What you are running into is an internal overlay. 

But I have accepted deals with their initial counter because it gave me a spread.For example, the bank stated they would do an internal BPO if I countered, and to be honest I thought the internal BPO would come in higher than the external.

Personally, I go a step further myself looking at the old mager's internal rate of return considering what managerial contributions will be needed as well.

I rely on cash flow projections and internal rate of return for my buy and hold decisions.

Loopnet unless a small broker putting on their the property has been around awhile.You have to get on the internal lists to see off market and pre-market listings.I am on a lot of those plus I call property management companies and owners directly for off market.I have clients around your area.

At best case, the turnkey company is overwhelmed or has very poor internal communication, and simply didn't finish all the work before the inspection was ordered.  

I feel like a lower rate is justified for this deal for some of the following reasons:- international tenant who has occupied both properties for over 10 years (and NOT energy related)- NNN terms where they maintain everything except the structure- Purchased below appraised value- 800 credit score of borrower - short term loan.