Every state is different on what labor and material will run you, you are from PA and he is from Maryland ( he may have investments in PA and know the market) but i wouldn't go buying a property based on that price fluctuation. go to a local reia meeting and talk to other investors in your area that may be willing to sit with you and give you an idea, take a contractor out to lunch and pick his brain for a little bit or purchase an estimating program that has a multiplier in in for whatever state you want to do an estimate for.

Purchase Price: $159,900.00 Purchase Closing Costs: $2,000.00 Estimated Repairs: $5,000.00 Total Project Cost: $166,900.00 After Repair Value: $159,900.00 Down Payment: $31,980.00 Loan Amount: $127,920.00 Loan Points: $0.00 Loan Fees: Amortized Over: 30 years Loan Interest Rate: 5.000% Monthly P&I: $686.70 Total Cash NeededBy Borrower: $38,980.00 Monthly Income: $1,900.00 Monthly Expenses: $1,663.04 Monthly Cashflow: $236.96 Pro Forma Cap Rate: 6.64% NOI: $11,084.00 Total Cash Needed: $38,980.00 Cash on Cash ROI: 7.29% Purchase Cap Rate: 6.93% ExpensesIncome50% Rule Total operating expenses: $976.33 Mortgage expenses: $686.70 Vacancy: $133.00 Repairs: $190.00 Electricity: $75.00 Water: $125.00 Sewage: $210.00 Garbage: $75.00 Insurance: $60.00 P&I: $686.70 Property Taxes: $108.33 Financial Info Income-Expense Ratio (2% Rule): 1.14% Total Initial Equity: $31,980.00 Gross Rent Multiplier: 7.01 Debt Coverage Ratio: 1.35 Analysis Over Time Hide Assumptions Typical Cap Rate /year Expense Increase /year Income Increase /year Property Value Increase Year 1 Year 2 Year 3 Year 4 Year 10 Year 20 Year 30 Total Annual Income $22,800.00 $22,800.00 $22,800.00 $22,800.00 $22,800.00 $22,800.00 $22,800.00 Total Annual Expenses Operating Expenses Mortgage Payment $19,956.43 $11,716.00 $8,240.43 $19,956.43 $11,716.00 $8,240.43 $19,956.43 $11,716.00 $8,240.43 $19,956.43 $11,716.00 $8,240.43 $19,956.43 $11,716.00 $8,240.43 $19,956.43 $11,716.00 $8,240.43 $11,716.00 $11,716.00 — Total Annual Cashflow $2,843.57 $2,843.57 $2,843.57 $2,843.57 $2,843.57 $2,843.57 $11,084.00 Cash on Cash ROI 7.29% 7.29% 7.29% 7.29% 7.29% 7.29% 28.44% Property Value $159,900.00 $159,900.00 $159,900.00 $159,900.00 $159,900.00 $159,900.00 $159,900.00 Equity $33,867.29 $35,851.13 $37,936.47 $40,128.51 $55,847.23 $95,156.79 $159,900.00 Loan Balance $126,032.71 $124,048.87 $121,963.53 $119,771.49 $104,052.77 $64,743.21 — Income, Expenses and Cashflow IncomeExpensesCash FlowLoan Balance, Value and Equity EquityLoan PayoffProperty Value Edit Report Download PDF Report (Pro Only) Upload a company logo

It is a form of gross rent multiplier that does not take financing into account.

Now that you've discovered the information and networking on Bigger Pockets, I'm sure your productivity will multiply ten-fold!

My experience with reno is whatever you think its going to cost, multiply that number by at least 2 or 3 times.

This means that you take your monthly PITI payment (principal, interest, property taxes and insurance) and multiply it by 3 or 4, depending on what your lender requires.

when i go to enter Property Tax and Mortgage Interest on the property, do i just enter the total amout of Interest and Tax, divide that by 12 and multiply by the months i had the property rented?  

I came up with 4.56% by subtracting all of your monthly expenses except your mortgage from your monthly rent, multiplying that by 12 and then dividing by 190,000.

I looked at the county assessor site but the assessment seems low (if I'm looking at it right)... is there a multiplier?

Purchase Price: $45,000.00 Purchase Closing Costs: $3,000.00 Estimated Repairs: $10,000.00 Total Project Cost: $58,000.00 After Repair Value: $45,000.00 Down Payment: $1,575.00 Loan Amount: $43,425.00 Loan Points: $0.00 Loan Fees: $0.00 Amortized Over: 30 years Loan Interest Rate: 4.00% Monthly P&I: $207.32 Total Cash NeededBy Borrower: $14,575.00 Monthly Income: $1,100.00 Monthly Expenses: $765.98 Monthly Cashflow: $334.02 Pro Forma Cap Rate: 11.20% NOI: $6,496.00 Total Cash Needed: $14,575.00 Cash on Cash ROI: 27.50% Purchase Cap Rate: 14.44% ExpensesIncome50% Rule Total operating expenses: $558.67 Mortgage expenses: $207.32 Vacancy: $110.00 Repairs: $22.00 CapEx: $55.00 Water: $75.00 Insurance: $75.00 Management: $55.00 P&I: $207.32 Property Taxes: $166.67 Financial Info Income-Expense Ratio (2% Rule): 1.90% Total Initial Equity: $1,575.00 Gross Rent Multiplier: 3.41 Debt Coverage Ratio: 2.61% Analysis Over Time Show Assumptions Year 1 Year 2 Year 3 Year 4 Year 10 Year 20 Year 30 Total Annual Income $13,200.00 $13,464.00 $13,733.28 $14,007.95 $15,775.22 $19,229.91 $23,441.15 Total Annual Expenses Operating Expenses Mortgage Payment $9,191.81 $6,704.00 $2,487.81 $9,325.89 $6,838.08 $2,487.81 $9,462.65 $6,974.84 $2,487.81 $9,602.15 $7,114.34 $2,487.81 $10,499.71 $8,011.90 $2,487.81 $12,254.27 $9,766.46 $2,487.81 $11,905.26 $11,905.26 — Total Annual Cashflow $4,008.19 $4,138.11 $4,270.63 $4,405.80 $5,275.51 $6,975.63 $11,535.89 Cash on Cash ROI 27.50% 28.39% 29.30% 30.23% 36.20% 47.86% 79.15% Property Value $45,900.00 $46,818.00 $47,754.36 $48,709.45 $54,854.75 $66,867.63 $81,511.27 Equity $3,115.68 $4,739.91 $6,418.64 $8,154.07 $19,895.12 $45,901.92 $81,511.27 Loan Balance $42,784.32 $42,078.09 $41,335.72 $40,555.38 $34,959.63 $20,965.72 — Income, Expenses and Cashflow IncomeExpensesCash Flow Loan Balance, Value and Equity EquityLoan PayoffProperty Value