., 100+ hours and more than anyone else), then the rental is considered non-passive, and you can fully deduct losses against active (W-2 or 1099) income—no $25K cap applies.

As such I believe you are a little low.Those who use straight percentages of rent for maintenance/cap ex have not really put much thought into the rationale.  

So from one side the argument could be made that this move is just to give the jv partner his liquidity and new investors end up holding an asset that (while cash flowing) may be difficult to exit.

Looking to see if I'm not thinking of something or if I'm way off in left field for an offer price.Asking Price: $469,000Units 1-7: $650Unit 8: $500Unit 9: $950Unit 10: $200 (does maintenance and lawn care for reduced rent)Total:  $6200 gross monthly rent (trash, water, and lawn care provided in rent) // $74,400/Annually*All units MTM currently*Expenses: 50% or $3100/monthly // $37,200/AnnuallyNOI: $3100/month // $37,200/AnnuallyAt an 8% cap rate = $348,500 Offer PriceAt a 9% cap rate = $309,778 Offer Price *Note: The county environmental office DOES NOT have any septic permits on file - I would need to file for all 10 septic permits for ~$7K-$10K.

Closing off meaning, I could just remove the lever/plunger and put a cap on the lever.

They will offer a buy out of the lease of say $200k (12,000/.06; e.g. 6 cap).

The property has a strong Cap Rate within the normal range for this type of asset and is located in a stable, growing market.The real appeal of this deal is the clear and immediate path to forced appreciation.

Quote from @Karolina Powell: Looking at a 1.2M portfolio with 17 units, 12% cap rate. 

Buyers property manager will immediately begin leasing the property for proof of concept to hit rental rates needed to justify a $1,500,000 sale prices at an 8.6 cap, which is still high for the area as Independence is closer to a 7-7.5 Cap rate.

These areas are harder to rent out, but have great cap rates and can be very profitable with a little sweat equity.