And rent loss and capital costs are part of the 50% as well...Try watching this very unprofessional video I put together that will explain it better:http://www.biggerpockets.com/forums/311/topics/72246-the-50-rule-video-tutorialMortgage payment (principal and interest @4.75%) = $652That's the other important part of the equation for doing the rough analysis...If your gross rents are $1200/month, the 50% rule says that, long-term, your NOI will be somewhere in the vicinity of $600 (50% of gross rents).

Disclosure:  I was a licensed agent for 3 years....I understand both sides of the equation here.

You have half the equation, the contract.

I am assuming that is your 0.70 factor in the income equation. 

Make sure these costs are factored in your equation. (2) Have you ever property managed before?

If we get past affordability peak on the backs of life-time low interest rates, he's not excited about being part of that equation. 

Most people typically buy in this area that I am looking at.Numbers are as follows:Property Type:2005 yr built 4 BD2.5BTH2096 sq ft.3,700 annual taxes$61/sq ft.Anticipated rent based on recent comps: $1,360Tax/mo: 308Insurance: $125 (guess)Management fee (10%) = 136Repair reserve (5%) = 68Vacancy reserve (5%) = 68Total cost before mortgage = $706 (just around the 50% rule)Anything else (costs) I am not anticipating in this equation?

I am sure I am leaving something important out of the equation.

With upgrades we have planned to the units, that situation will only marginally improve over the next several years.Planned upgrades:New windows - $2500 x 17 = $42,500New HVAC & central air - $3000 x 9 = $27,000Interior upgrades to remaining 9 units - $3000 x 9 = $27,000TOTAL - $96,000This sounds daunting, but over the remaining 4 years of our 5 year plan equates to $24,000/year, or $2,000/mo., which is quite manageable.

Then the listing agent has to submit it to the equator system.