50%/2% rule

[Eric NA]

I have read the stickey's and I believe I understand the basic principals behind the rules, but I am having a hard time adjusting it to my local area. I want to throw out an example of a typical home in the area I am looking at investing in:

Average home: 100K
Average rent: $950

Now lets say I pick up a home in this neighborhood and I plan to rehab it (not a major one but a $5-$10 sq ft one) and then use it as a rental property.

Using the 2% rule, my monthly rent should be about $2K. Now obviously I'm going to find a home that's selling below the average home in the neighborhood, but to get down to the typical rental price of $950 I need to purchase the property for $47,500, actually less if you take into consideration I will need some cash for the rehab so that will up my total investment. Lets say it's a cheap rehab and it runs $7,500 so my purchase price $40,000 max. That's 40% of the average price in the neighborhood!!! Am I really looking for properties that THAT much of a discount?

Using the 50% rule, if I purchased the home at 47K (after improvement), 7%, 30 years, my mortgage is going to be $330 month, expenses will be 50% of 950 @ $475 per month leaving me with $145 positive cash flow.

My question here is, would purchasing a home for 40K in a neighborhood with comps @ 100K be nearly impossible?

I understand finding motivated sellers and I have been working on how I am going to target/locate them in my area, but I need to know when I have spotted a great deal and when the numbers don't work. I don't want to go around looking for a deal like I mentioned above at 40K if that's just not going to happen, but according to the 50/2 rule, that's exactly what I should be looking for.

I live in Tulsa, OK so 100K is in an ok area.