Novice question about 50% rule in 4plex (yes, I've researched)

[Mike Hodukavich]

Hello everyone,

 I put my first topic of discussion in the Introduction Forums:

http://www.biggerpockets.com/forums/55/topics/148264-new-member-moving-to-denver-co?page=1#p992972

Now. The only thing I was educated on was cash flow and appretiation with the property I am about to discuss.

We close on the 30th. The property backs up to electrical lines, and underneath is a walking trail that takes you to the light rail. The light rail is a 2 minute walk.

Now the numbers:

$100k down payment on 4 units

gross income is $3100/mo as-is (needs new kitchens and flooring)

mortgage is about $1700/mo

Now instead of the 2% rule, I would have hit 3%?

Also with future renovations and higher rent (which according to my trusted real estate broker and trusted property manager) I should be able to take in ~$4,000/mo.

Just had a new roof put in. Has (3) 25 year old furnaces which I got a quote of $5100 installed for all 3, could use new flooring. Also has single pane windows.

All that being said according to the 50% rule, as of now, I would intake $1500/mo. which after paying mortgage and insurance would leave me a negative $200.

My question is, what am I missing? I'm trying to further educate myself and appreciate any information. If you need any more info feel free to ask. Thanks, Mike.