but earlier this year and last i bought 2 houses 3/2 about 1300 and 1400 sq ft for $60k- 70k these were thrashed and i rehabbed them myself for about 10 k a piece basic 3/2 house in the High desert rents for 1100 - 1200 a month so that is right at 50 % rule The numbers presented here look more like the 2% rule to me; this is where you multiply one month's rent by 50 to get the "maximum price to offer". 1/50 = 2%The 50% rule is another analysis, where the rent is divided by 2 to cover expenses, leaving one half the rent for loan principle and interest payment and cash flow or profit.

This is average rent multiplied by number of units multiplied by 12 months.

This obviously means the higher the cap rate, the lower the price you are paying.If you multiply by the cap rate, the result will be the opposite.

Then, calculate the p/sq ft and multiply it by the sq ft of the property.Figuring ARV is tricky these days.

A Gross Rent Multiplier(GRM)<10 is certainly one way to screen properties along with cap rate, 50% rule, 1% or 2% rule, and a whole host of others.

December 2014 probably means that your FHA MI rate is 1.3% or more. 3.625 + 1.3 = 4.925%.My memory isn't perfect and FHA MI changed right around Jan 2015... to figure out your FHA MI rate, multiply the monthly MI payment by 12 and divide by original loan amount (see, mortgage math isn't so mysterious after all is it?).

Marquell Jones also may I ask how you came up with $20 multiplying it by the sq ft to equal your repair cost?

Why is it that we say rents received from the property equals only 2% of the purchase price instead of multiplying the number of units in the property by the amount of average rents to determine the approximate amount of rents that will be received?

Understanding discounting methods, IRR valuations, and financial metrics will be paramount in effectively multiplying his dollars. 

Just read an article today saying that you should NEVER buy any income producing real estate that does not have a Gross Rent Multiplier (GRM) of more than 8.iow, A property renting for $1,250 a month, or $15,000 a year should be purchased for no more than $15,000 X 8 = $120,000.I've NEVER been a big fan of GRM!