Pricing - market vs cash flow

[Stephen Masek]

We all know that commercial real estate often is valued and sells based on the rent it draws.  How mush do you think that applies to single family houses?  We've got a house in Memphis (rehabbed, no work needed) which is rented for $725 on a lease with 20 months to go before renewal, in a neighborhood where rents run $700 to $750.  Management, property taxes and insurance run $216, for an annual cash flow of $6,108.  If somebody is looking for a 10% return, that would mean they should be willing to pay $61,080 for the property.  However, the prices in the neighborhood include foreclosures, so are all over the board.  We are thinking $52,000 would be a good listing price.  What do you think and why?