In many cases, luxury waterfront properties (A Class) have almost no buffer (two blocks) to the D-Class area. 

Budget for rehab= $22000 on low end, $27600 on high end (with 25% buffer on many items).

This would cover the mortgage and expenses plus a buffer to handle vacancies.  

Ian, felt exactly the same way, that's why I got licensed it cuts the buffering down by 50%. 

Vacation rentals are probably one of the areas where it would be nice to have a healthy cap rate because you need the buffer for fluctuations in the market on top of the fact that they are typically in secondary housing markets and those are what we see have some of the largest swings in appreciation and depreciation.

Ways to mitigate risk in a down turn -Manage debt..leverageEnsure you have a buffer/equity Sell some properties in a rising market, no one ever goes broke taking a profit.

." - Zillow.comDeal Analysis: Using the SFH Analysis Excel sheet by @Brandon Turner.NOI: $10,185Cash Flow:Net Operating Income: $849Mortgage: $470Total Cash Flow: $379/Month Return on Investment: %17.08( Cash flow Includes costs listed below but the spreadsheet forces $2,900 in closing costs, which may normally be paid by the sellar, I think. )Purchase Price: $116kRepairs: $500 ( Stated to have been like new. )Downpayment: $23,200 (20%)Financed Portion: $92,800 (80%)Monthly Rent: $1600 ( Comparative + adjustment from Rentometer.com)Vacancy Rate: 10%Property Taxes: $270/Month ($3233/Year)Insurance: $288/Month ($3456/Year) - Suggested on SpreadsheetMaintenance / Repairs: $100/Month ($1200/Year) - Suggested on SpreadsheetAdvertising: $150/Month ($1800/Year) - Suggested on SpreadsheetAdministrative: $150/Month ($1800/Year) - Suggested on SpreadsheetUtilities: Paid by tenantConclusion:After comparing and running my numbers through Brandon's sheet, I feel like the final cashflow of $379 is a well-buffered number.

Insurance is another buffer to all that, but again I am considering worst case scenarios when making that decision.

This get's me a hands on education while doing my best to work hand in hand with an active investor to make sure I'm bringing value to their time they're investing in me.However, I've aligned a couple lender's so I'm prepared to bring in up to $60k with a remaining $10k buffer for carrying and unexpected expenses on a rehab and flip

Here are the terms:Offer terms with seller financing:Purchase: $250,000Down: $30,000Seller Carries: $220,000Interest due to seller (annual): 5%Term: 18 monthsPayments: Interest only = $917Closing Costs (1.3% for escrow and recording fees and prepaid insurance/taxes/interest): $3,250Rehab and Holding Costs:Rehab: $60,000Property Taxes (monthly): $257Insurance: $200Utilities: $150Plus 10% buffer = ~$670Resale:ARV: $375,000Closing Costs (3%): $11,250Commission (5%, my partner and I would co-list): $18,750My Contribution:Cash Invested: $90,000 (down payment + rehab cost)APR: 5%Term: 5 months (could vary depending on number of months actually held)ROI:ARV: $375,000(Selling Closing Costs): (11,250)(Commission): (18,750)= Gross Margin: $345,000(principal on seller carry): (220,000)(total interest on seller carry - $917 x 18): (16,500)(purchase closing costs): (3,250)(holding costs - $670 x 5): (3,350)= Gross Profit: $101,900(repay my cash investment plus interest): (91,891)= Net Profit: $10,009Here is the spreadsheet I used for all the calculations:Have I calculated everything correctly?