Matthew,Here's an assessment using your most optimistic values, and my optimistic expense=40% rule of thumb.Buy: $92,500Rehab: $7,500Loan: $103,000 (includes orig fee and closing costs)Payment: $685.26 (7%, 30 year)Rent: $1200Expenses: $480NOI: $720Cash flow: $34.74Thats pretty thin, especially in light of all those assumptions.When you say the garage is enclosed, do you mean its been converted to a family room or bedroom?

I think I'd have to go into the economically depressed urban areas around here to find properties like that... which would violate the safe for wife and daughter rule.

What is the general rule for working capital needs and/or maintenance reserve you all use on residential properties?

However, it is now tough for me to qualify for a conforming loan because I already own 4 homes and Freddie has just changed the rules there.This home is probably worth around $300,000 and I am willing to sell it for between $200,000 and $240,000 depending on the terms.

Some of the expereinced folks here use a rule of thumb that says expenses (including insurance, taxes, vacancies, maintenance, management fees etc.) will be 40-50% of gross rents.

Its the same as if you had a mortgage or owned it free and clear.Read up on the "50% rule".

Your "if I applied that rule, I'd never buy anything" is a common complaint.

A very old rule of thumb is that rents should be 1% of the property price.

TJ,When looking to buy a rental property, many investors use a 1% rule.

Sorry, I read the rules after I posted.