The 1% rule, while a good back of the napkin approach, completely ignores price appreciation which is the single biggest driver of returns in Metro Phoenix.

Do you expect your tenant's to keep the place clean and sanitary on an ongoing basis, or do you just wait until they move out and deal with it then?

It'd have to be industrial amounts of urine for that to be the case.We have one house, distressed purchase, and someone had allowed their dog to pee in one place, in the kitchen of course, nice and sanitary, (how do these people live), and it gets into the baseboard, and does soak into the wood.

I own 3 properties with the following bar napkin financials:Current Market Value: $1,215,000Current Total Loans: $590,000Current Equity: $625,000Current Total Annual Cash Flow $20,646 (positive)I'm taking that cash flow and dividing by my total equity to render a current ROE of roughly 3.3%.Does this sound even halfway correct to you, BP?

I understand that these are much smaller figures than what people use for 'back of the napkin' math, but our focus is on providing hard data, and then investors are able to inflate their 'safety net' figures to their comfort level. 

There's several "back of the napkin" formulas we use as well as more in depth spreadsheet models that I lean on.

 $48,000 divided by $3,600 = 13.3 doors to replace your entire income.It's an over-simplified calculation for sure... but it is just a 'back of the napkin' estimate, and is more than likely a bit low.  

@Ran IarovichI go with back of the napkin quick math and my gut.

If you have a friend who is a GC or if you can connect with an experienced investor in your area, they you may be able to have them walk the home with you for a back of the napkin budget before you even submit an offer. 

Ok, simple napkin math.