Your second option is to find a cosigner who can add their income to the equation to bump up that qualified price.

Does it make sense to use the historical purchase price etc, and add the equity into the equation somewhere. or use the remaining mortgage.... i cant seem to wrap my head around it. either waySingle family hime Purchase price 460,000down payment 23,000remaining mortgage 416,000reno budget 100,000Rental income 2,300monthly operating expenses 891.00Mortage payment 1873.00 per monthwhat more information needs to be considered. 

What about the other half of the equation, the property's equity value? 

And if you use a down payment instead of buying for cash, the CoC number goes even lower since you have to factor that in to the equation. 

What also factors into the equation is if you have a prepayment penalty on your HML - that could throw the math off making it more worth while to hold onto the HML for a certain period of time.

How about a 2-3 bedroom home in a market where that likely equates to an asset worth roughly $350,000?

Leverage equates to risk and return. 

Inventory is limited and the demand is high, which equates to some high prices.

To meet the 1% rule, the equation for the property above would look like this:Est.

It can be tricky balancing the cash flow equation in some of the really good areas though.