And, you subtract off any work you need to do.

In addition, since this unit has owner payed utilities, the expenses could very well be above 50% of gross rents.When I analize these deals (quick analysis), i take the max. gross rent, subtract out the "current vacancy" arriving at the adkusted gross income.

For rentals, consider expenses = 40-50% of rent, subtract off the P&I payment, and leave yourself a profit.

Subtract off the closing costs (about 8%).

. * I would go to 50% ARV on Rehabs.Ideal CandidateStrong income, Strong Credit, Strong Financial AssetsHands OffIf you have money as collateral in a Commercial bank......They will work with you.They will loan 80% of appraisalIt would be helpful if the bank would refinance these loans once the repairs are completed.Also, it would be helpful if lease options were structured as Fair Market Rent plus more as an option payment.Example:Market Rent = $1000 pmOffer $950 pm plus $200 pm as option payment (subtracted from future purchase price)Future purchase price can be tied to a future appraisal OR a set figure, whichever is higher.Ideal location of homes for tenant buyers - STRONG EMPLOYERS in the area that are recession proof.Consider not giving an option to purchase, but a Contract for Option to Purchase.

Subtract half for expenses, subtract off what you want for cash flow, then figure the max price from the remaining money.I realize you may be buying this condo to occupy yourself.

OK, here's how I'd do it.Rent: $1900/moExpenses: $950NOI: $950Desired cash flow: $200Max payment: $750Max loan: $112,730 (7%, 30 years)I'd then subtract off the needed work.

I wasn't too good at addition and subtraction (even with a computer program) so I took a chance and hired a part-time bookkeeper.

Then subtract out your debt financing and the balance is your cash flow.Keep in mind this rule is based on making assumptions and averages and should not be used as the final decision to buy or not to buy.

Then, subtract your P&I payment out of the remaining $800 and you get your cash flow.