The seller is going to choose the sales price, calculate NOI then determine what CAP rate that equates to (sometimes they will tweak the NOI to make the CAP higher).The buyer on the other hand will want to look at the NOI and market CAP rates (or desired CAP rate) then decide if the price makes the particular property worth pursuing or not.The market CAP rate does not exist without somebody transacting property at a set price.  

Your ability to cash flow is one half of the safety equation, the other half being your ability to exit. note - I don't mean you have to exit; you wanna hold - hold.

Taxes are high, but that's just part of the equation.

It sounds like one of the key ingredients to problems is a disgruntled homeowner so if I can eliminate that side of the equation, the only people left to deal with are business people that don't have an emotional attachment.  

Banis,Quick answer: Check out the BiggerPockets mortgage calculator hereDetailed answer:Your monthly income is only one piece of the equation.

Cheap doesn't always equate to a good value though .

If it is more than 1.25 it will actually add income into the equation.

They need to be approved by your lender, but this actually is a really easy process on the contractor/lender side of the equation.

On average they pay $933/mo and that equates to $84K gross collected rent and 16% of economic vacancy.

Take the garage, fence, central air out of the equation and your left with a 700 - 750 type house...