Cap Rate = NOI/Purchase Price and you want to aim for 10%.Therefore, to get an idea of whether a place is priced right you can multiply the gross rent by 50 and that number should be in the range of the purchase price.If all this is true, I'm having a very hard time finding properties that fit the above rules or even come close.I'm looking in Chicago.

Take the monthly rent and divide by 2%; or, take the monthly rent and multiply by 50.

@Betty Cruz - Thanks for your insight.I re-ran my numbers and used tax amounts based on the tax rate multiplied by the price I'm offering, and the projected ARV after I do some renovations.

Maybe a price per square foot or some sort of factor I can multiply by the difference in square footage.

The yearly cash flow is just the monthly multiplied by 12.

Either the appraiser will do this for you OR if there are existing lease agreements, those can give you the value.Then you must multiply the fair market value of all rents by 0.75.

If you are looking for cash flow then Pittsburgh is a great place to be because the gross rent multiplier is pretty low.

I just finished Avery Carl's book on Short Term investing and see the Gross Rent Multiplier formula as well as the Cash-on-Cash return formula.

So, minimize leverage by paying cash, reduce risk by fixing & stabilizing the property, then add leverage to multiply positive returns once your risk profile comes down.

The really, really rough (never use this on your tax returns... but it is a good way to impress your friends at cocktail parties) is to just take 3% of the purchase price to estimate your gross depreciation for the year.Then--and this is controversial since I am mixing pre-tax and post-tax returns--multiply your gross depreciation by your effective tax rate.