@Jacob Abuata congrats on what you've done so far.If you want 10k/mo (120k/yr) in passive income the formula is pretty easy (but no so simple to execute).

But we have looked at many other properties using the same formulas and every time, our offer price calculation is significantly below asking price. 

I am just starting out and I have recently found a house on the MLS that is a duplex which needs some work but it is selling for 99,000 and has 1 existing long term tenant already paying rent of 825 per month.2 questions:1) What is the exact formula or guide i can use to analyze this house (Duplex) to see if it is a good investment as a rental property? 

Lekisha,If you can buy at a deep enough discount where the basic formula still applies (70% of ARV minus cost of repairs) and you can still sell at a profit after Realtor commissions, that's what matters.Gary

Same question for cash-on-cash formulas.

@kevin zheng    I'm not sure of their exact formula, and whait I'm about to say may be a conincidence because  I have Section 8 rentals in Cleveland as well as Concord, CA and Oakland, CA. 

So, for a fix-and-flip, I would start with this formula:65% of the ARVminus repair costsminus holding costsminus closing costsminus your expected profitgives your MAO - Maximum Allowable Offer.There is some debate about the 65% - some folks only go down to 70%, others take even less discount and it will depend on how competitive the market is.

My guess on your folks long term success would simply be the magic formula of rising rents over time, reducing debt (and increasing equity) as your tenants pay down your mortgage, and in, many areas, handsome price appreciation....Over the long haul it has been an effective formula for many investors even if you can't articulate it (the home prices and rents have just gone plain gone up over 30 years...)Best of luck Philip....

Understand financial formulas, present, future value is about as complicated as it gets and we have calculators for that.

Cap Rates vary and can be derived with numerous variables that impact the cash flow/purchase price formula.