Both of these would normally get factored into escrow, but if applicable you’ll be responsible for paying them out of pocket Last note-even if the seller requires a down payment, you have other options.

So focus on adequately covering your risk first, then deal with minimizing cost for that strucutre and how it's factored into your GC's rates & quote.  

Hi, just wanted to get your opinion on below number-Property price - $420kAnnual gross - $42kExpense $7.8kVacancy Factor - 0.01Is it considered a good deal considering it’s in California?

Rates can be a tad higher (figure the 5-8% range depending on a wide variety of factors like FICO,LTV, size, property type, etc) but the 30 year terms can often provide improved cash flow over the shorter term notes from local banks.

@Kenneth Garrett Thanks for explaining how the estimation would factor in from a high level.

This is my "treat yourself" upgrade and the safety of my family factored more into that decision than before.But my previous 2 vehicles (all I've owned since getting my DL) were only worth about 2-3k.

In this situation the deciding factor is going to be turnover...... if they say no, are you going to move out and then landlord is going to have to spend the $$ to do the improvements anyway, but can then up the rent even more and recoup that $$ quickly?

Fix and Refi etcEveryone is so quick to blow this deal off and say its too much at 12.5 Gross but there is always more details to factor in.What are you putting down 5%, if you make just a little you are way ahead on a ROI basis. 

While "on paper", changing properties may sound like a good way to go but don't forget to factor in sales costs, 1031 fees, purchase costs and most importantly the time, effort and expense to stabilize additional properties and place new tenants.

@Greg Dickerson so you are pretty much saying that in your underwriting, you are comparing current NOI's versus projected NOI's based on the local market, then factoring in your minimum profit margin to come up with an offer number.