Both the rule of thumb cited here, "pay for itself in three years" and the "2% rule - monthly rents must be at least 2% of the selling price" are variations on GRM or Gross Rent Multiplier.

Operating expenses are about 50% of gross rents.As a screening tool, if you divide the monthly gross rents by .02 (or multiply the monthly gross rents by 50), that will give you the maximum purchase price for finding a property that will cash flow.

If your example house rents for $3000 (as shown by comparable rentals in the area) then multiply by 50 to come up with the max you should pay to see positive cash flow.

Instead of multiplying .03 to the 1st value, then adding that 3% to get the 2nd value... then repeating all the way up to now, what's this process called and is there and easier method in doing these calculations?

Simply what the market rents are for the set ups you have multiplied by the numbers of units in the building multiplied by 12 to get the yearly total.

You will use this percentage to figure and multiply it by the following household expenses: maintenance, interest, property taxes, insurance, and utilities.

Divide by .02 rather than multiply.

If NCF is positive for a property, it is added to your income, if it's negative it's added to your debt payments.For your new subject property, since you have experience, they should take the market rent as determined by the appraiser, multiply it by 75%, then subtract PITI to arrive at NCF.

How do I multiply what I have into more cash flow?

The land of a vacant mobile home pad is worth $0.The 60x (off city utilities) and 70x (on city utilities) multipliers of monthly rent are correct.The correct way to value a MHP is the lot rent multiple, plus the FMV for the individual mobile homes (not a multiple of their rent). 1970s 'beater' MHs might be worth $1,000 - $2,000. 2000-and-newer MHs might be worth $20,000 - $25,000.