They will say they are new properties, and they have ready tenants, so the expenses will be low.At best, they're understating the expenses and covering the shortfall out of their profit for the guaranteed period.

Naturally, many have understated operating expenses and overstated cash flow.

Most sellers understate expenses to increase the cap rate.

Foreclosure laws are under state control.

Every single time so far in my career that I have asked the listing agent how long the property has been on the market (now keep in mind I only ask when I know its been on for awhile), the agent understates how long it has been.

I noticed that (re: low end & cash flow) on paper, too, although the concern there is A. problem tenants and B. resale down the line and lastly C. the seller usually overstates income/understates expenses so upon diligent research, I've found that the cash flow often is minimal or disappears altogether--and the repairs necessary (usually involving heating & insulation, since all the low ends I've looked at include H&HW) to make the property flow are quite high.

It's hard to understate the importance of having a good property management company on your team; A) because it will help you sell the deal to lenders and investors B) once you buy it they have the job of turning the possibilities into real cash flow. 2.

As to the co-op angle, if you are netting a profit from the lease, you should use a seperate lease to sub-let the property, if you are not, you can assign the lease if the assignment is allowed under state law, best to just specifically agree to assignments.

He sent me his tax return with the following information:Gross Rents: 104,717Advertising: 754Cleaning & Maint: 7,627Insurance: 5,364Legal fees: 558Interest: 7,548Repairs: 9,907Taxes: 15,350Utilities: 2,133Depr: 11,849Other Fees: 1,117Garbage: 916Water/Sewer: 10,266Total Expenses: 73,349add back in Depr. and Interest and you get a NOI of about $54,000.As you can see, it looks like he either over-stated the amount of rent per month or under-stated his vacancy rate.

My research tells me they are going higher thru the rest of 07 at least.The median price of USA homes has risen to $260,000 ish..Math that and one arrives at $34b a month.REDevelopers volume is not included..but we all know it is horrendously both enormous and under stated.