Matthew,Here's an assessment using your most optimistic values, and my optimistic expense=40% rule of thumb.Buy: $92,500Rehab: $7,500Loan: $103,000 (includes orig fee and closing costs)Payment: $685.26 (7%, 30 year)Rent: $1200Expenses: $480NOI: $720Cash flow: $34.74Thats pretty thin, especially in light of all those assumptions.When you say the garage is enclosed, do you mean its been converted to a family room or bedroom?

So, whether or not you have an LLC is irrelevant for the tax questions.In either case, you'll need a partnership return, then each of the partners will move their parts of the profits or losses to their personal returns.IIRC, CA charges an $800/year franchise fee for LLCs.I'd be DANG SURE I had a detailed, written document describing how the partnership would work before I did any deal with partners.

http://www.prudentialelliman.com/MainSite/Guide/NYCClosingCosts.aspxYou will not get hit with all these closing cost,just a rough idea.The Title Closer fee should be paid by the sellerGL..

I currently have a home under option contract for 2 months. I have it under option for 212K and marketing it for sale at 220K. I know it's not a big deal, but I'm just looking to get my first deal done.

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He is interested in the same types of deals that I am -- Buy and hold (rent) real estate, with possible lease options on the back end.I told him that there is a range of options, from him buying the property outright (with a wholesale fee to me), all the way to me buying the property (with a mortgage held by him).

With a conservative 50% for expenses, it looks like this:Rent: $450Expenses:$225NOI: $225Payment: $183cash flow: $42Total cash invested: $5700 (include orig fee and closing costs)Cash-on-cash return: 8.9%That's too low, IMHO, for high risk, high hassle investments like real estate.OTHO, you're using a down payment and a 15 year note.

We understand that our source of income would be the lease option fee we charge + income from additional rent (as apposed to what we pay on our option).

I dont like paying the appraiser fees when I'm wholesaling a property.

if i am going to put an offer on a property with the offer price of 475k what would be the max dollar amount you lease optioners would put down as an option fee

After foreclosure and legal fees I was into it for $10K.