The capitalization rate of an investment can be calculated by dividing the property's net operating income (NOI) by the current market value or acquisition cost of a property - expressed in the following formula: Cap Rate = Net Operating Income / Current Market Value " Chicago Cap Rate Analysis Please keep in mind this is a high level analysis.It should give you a ballpark idea of cap rates in the various Chicago neighborhoods.But some assumptions were made for this analysis.For example, to determine the net income for a property, I assumed it would be 50% of the Gross Rental Income.

In short, I recommend never to take all the extra cash flow out of the business, not only to be prudent with the NOI, but also because you need to operate a profitable business. 

I'm just a 2 person operation and nobody else to give crap to!

PMs are great if you're running a larger (5+ doors) portfolio, in a similar area, and have "lived" self-management long enough that you know you're no good at creating standard operating procedures or farming out the work directly.

However, I stumbled upon the glamping niche, realized I could do it with some relatively small savings and low to no income, so I bit the bullet and set up an operation, paying for everything in cash and doing a lot of the work myself.

Hi Srushti,Some people jump in the water and know how to swim and some jump in the water and do not know how to swim.Like any other business you need to know what you are doing.Now you have retained the services of someone who you believe knows what they are doing to assist you.And for these services there is a cost.Some people (owner/operators) do the work themselves to lower the cost (somewhat).In this business you will have anticipated costs and unanticipated costs--it's not a magic profit genie.Sometimes you just have to write checks to get what you want.Just my 2 cents.

AND conversely there is a reason D-class properties have BIG COC numbers, because risk is through the roof, and the slightest deficiency in operations will all but certainly net BIG losses, and or reinvestment requirements. 

I and most of us, already know that the industry of real estate is the best industry to be in.I have some family members and family friends who either invest in residential properties on the side of their job, or they own and operate their own real estate investing/development company.

Regarding fixed IRR, there is an operator I know of that has a fixed (and tiered based on investment size) pref, but no split over the pref.  

I don't see any reason why the Landlord should be responsible for health practices of their tenants, but you need to decide for yourself how you want to operate your business.Check out Stessa.