My basic return formula looks like this: (Gross Income -Adjusted Expenses) / (Purchase Price + Required Improvements) = Return on investment.Shortened up: NOI/Cost=ROIAssuming the building you are considering has no deferred maintenance and assuming the seller’s Net Operating Income (NOI) figures are correct then to obtain a 9% return you would want to buy the property for $24,151/9% = $268,344.If you choose to finance the property then the terms of your loan and the amount of your down payment will determine what your return on your invested cash or ‘Cash on Cash” return is.

Rents around $500 are where that rule seems to work reasonably well, so at $600 - close enough.total monthly gross rents / 2% = 50 times rents => 50 x 2400 = 120Kfrom that, subtract repairs: 120K - 50K = 70KMax offer would be 70K, so start lower.Lots of other analysis formulas that could be used - the point is to try to get a number you'll be comfortable with paying so that you are almost guaranteed to be profitable (can only be profitable if good paying tenants are placed in the units).

This is the formula that has made fortunes and you are inline!

County assessor for tax purposes has nothing to do with a value of a house.All of these tax assessors operate differently and use different formulas to come up with an evaluation.

The way I usually get some quick numbers is just by using this formula.

Does anyone use this formula when analyzing a potential investment?

Oh, and for those who think that the transfer can be made at nominal value (like $1 or $10 or $100), the PA Dept of Revenue has a formula they use to impute a fair market value that will be the amount considered in the calculation of RTT - just because of people using nominal dollar transfers to try to circumvent payment of RTT.

Helps give some kind of formula to getting a vacation rental. 

It is that he is song it long distance.

So to confirm, you're saying the DTI formula will look something like this, right?