Cap Rate after income tax

[Supreet Singh Sachdeva]

I am a first time house buyer. 3 of us just made a LLC and are planning to buy our first rental property. I contacted an agent about a property and got a cashflow analysis worksheet from him. So, the property is for 23k with a cap rate of 25%. Here are the expenses given in the worksheet.

Real Estate Taxes-1294

Water-142

Insurance-305

The net cashflow mentioned before taxes is $6059. Looks good till this point. Then there's a term 'Tax Liability(savings) at 36%' which is $2041 and brings down the cashflow to $3628. What does this term exactly mean? Does this look like a good buy? What are the other expenses that i should be considering here?

Thanks

[Wayne Brooks]

1). They are telling you what your taxes due on the income Might be, and therefore your after tax net, assuming a 36% bracket. Just putting that number in there points to BS.

2). The assumptions are totally bogus......they have no expenses for repairs, maintenance, replacement of major items(capital expenditures), vacancy, tenant damages, management, etc. looks like they have annual income at $7700, so about $3850 plus 142=$$4000 expenses, $3700 Net, before taxes...all based on normal speculation...assumes minimal upfront repairs, no major components about to fail, and no unusually bad tenants.