A newbie question about multifamily

[Andrew McIntyre]

Going to throw out an example purchase for my questions, bear with me :) Ok, so I want to buy a duplex and rent it out. I'm going to just throw a number out, lets say total price is 180k. So question number one. I would divide 180k by 2 then multiply the 90k by lets just say 1% to get the amount of rent i should charge each tenant right? so annual income would be $21,600, for my example I will say my annual costs are $12,000 which leaves me with $9600. So here is what I don't get, if all I put into the property so far is about 50k (36k for 20% down payment and 14k for whatever else) do I just do 9600/50k? or 9600/180k? i get 19.2% c.o.c with one and 5.33% with full price. Which formula should I follow when buying a buy and hold multifamily property?

[Michael Lee]

Hello and welcome to this website!  You are supposed to do is what your goals say.   That being said, I am telling you from an inexperience investor, that you have several "rules of thumb" to helpyou to go further on an investment. Cash on cash return is one of the main computations that have good reason but it is just one one sign to look at.  All of the "math""rules of thumb" all tell you if it is a good deal or not.  There are many factors to look at like location and demand to tell you if something is worth pursuing.  If a rental project has positive cash flow you should pursue.  That is termed a good debt project worth pursuing if it is done.  Good luck to you!