Determining offer price for sfh

[Kenneth LaVoie]

I have just started looking for single family houses to buy and rent in the central maine (waterville, winslow) area. My plan (abbreviated) is to find plain but nice homes in decent areas, (not "high end" areas, just decent, where the shrubs are trimmed, older established people live, etc.) single story to appeal to older folks, close to shopping, etc. -- neighborhoods vs. busy main roads -- buy so that I can charge approx. 1% of purchase price for rent (ex. 80K house, 800-850 rent) tenant pays everything (heat, elect, etc.) - I own a lawn care and snow removal company, so I can offer my services there.

Nice little ranches and capes around here, with vinyl siding, fairly recent furnaces and roofs are anywhere from 89-110k.

My issue is coming up with a good max. offer price. Here's what I've learned from the forum and 2 mentors.

1. Use 50% of gross rents as average cost per month -- this will be pretty close over any longer stretch, like 5-7 years. So fro 900 per month rent, use $450. Now obviously, this is WAY high on a month to month basis, but add a roof here, and furnance here .. and it does indeed seem to give good padding. This 50% would include EVERYTHING that I would pay but NOT vacancy factor or principle and interest, so my carrying cost, at least on paper would be:
gross rent x 50% plus PI plus 8% vacancy.

2. I'd want to factor in 150- give or take for free cash flow.

3. Given that ... what is a good formula for coming up with an offer price??

4. Are any of you investing in SFH and finding that the 50% is NOT a good idea to use??

Thanks all!!