Multi Family Numbers - Do they work?

[John Romero]

Hi Everyone! I'm trying to run numbers on a potential duplex property i've been considering in NJ. (One unit is a 2br/1bath that can bring in $1200, the other is a 4br, 2bath that can bring in $2000.)

[i]Purchase price: $300k (Can be purchased for this amount)
Appraisal price: $470k (Currently on Zillow)
Sold in '07 for: $500k (From NJ tax information)
Current comps: $450-475k
Monthly Rent: $3200
Monthly Mortgage: $2400 (Including all taxes/insurance)[/i]

I've been doing some homework on BP regarding ratios and percentages. Trying to learn but still confused. Do the ratios take into consideration appreciation? The formulas i've been running are specifically how rent should be 2% of the purchase price. In this case, it's not; it's 1%. Expenses should also be factored in at 50% of the rent.

Ideally (from what i've been reading)
2% of 300k = $6k/month (what the rent SHOULD be)
50% of 6k/month = $3k/month (what the expenses SHOULD be)

So...

If expenses are $3000, and my mortgage is $2400; the total monthly carrying cost would be $5400.

Factor in rent of $3200/month and you'd be left with a loss on this property of $2200/month.

This can't be correct, is it? It seemed good, the mortgage was at least $800 less than rent every month, plus the property is in a good area, appraising for $175k more than the possible purchase price.

Am I missing something important in my math? Any tips to help out?

Thanks so much.