$500 month cash flow or at least 20% return on investment???

[Skip Gilliam]

 I've been spending a lot of time reading up on buying rentals here on BP and other sites and I've seen a few blogs and articles with the claim that some investors won't buy unless they are getting $500 monthly cash flow, or another figure I've seen a lot of is not buying unless you get a 20% return on money invested and the rule of 50% of rent to expenses -mortgage. Basically the question is, how is it possible to get these returns??? The math doesn't seem to add up with house and rent prices in my area anyway. 

Example: a house I'm looking at now 3bedroom 2 bath listed at $119000 (close to market value according to what has sold) even if I purchase it for 20% below market value as suggested that is $95,200. Rent on nearby homes in same neighborhood are $1200-$1300 max for similar house. So $76000 financed after a 20% down payment would have a mortgage of about $410 at 5% interest rate. $600 left over after the 50% guidline - $410 for mortgage payment only leaves $190 cash flow per month x 12 is  $2280 divided by investment of $19000 only comes out to a 12% return. That's not even counting on any of the costs to splash on a little paint and spruce the place up a bit with minimal costs. 

Just seems so far fetched for $500 a month cash flow or 20% return on every property. 

How many of you investors are really pulling in those numbers? 

Thanks for any information? 

[Josh Nicolson]

@Richard Dunlop -  You make an insulting comment "common sense", then talk about derogatory comments in the next sentence (WOW).  This is a forum for people to learn from, not to insult people.  I just tried to explain to the OP's post, that you have to be comfortable with your first deal... or it will never happen.  For me, I went to look at 20-30 properties with my wife that made excellent cashflow.  She didn't/wouldn't buy any of those properties because she felt "unsafe", ie she just didn't have the vision.  So I settled on a property in a nice neighborhood with a park.  I ended up making $60k equity in the deal, so yeah, not a good cashflow deal but not terrible equity wise. 

I used cash flow whore (for one because I have a sense of humor) but just to emphasize the fact I went from an equity deal to doing cashflow deals.  But it would not have happened without that first deal.  We now have 35 units, all but the first one making very good cashflow.

@Joe Villeneuve - I couldn't agree more with the second part of your statement.  That's why I only did one equity purchase (happy wife, happy life).  And the first part, I would agree with pretty much any investor except me; I DID have to do that deal, or else we would still be looking for that dream property that made good cashflow and made the wife feel happ and "safe".  I don't mind the criticism.