Here are two sets of formulas.A simple one.Max Price = (70% * ARV) - repairsThat should generate a profit of about 10% of ARV, 15% if everything goes well.It has a couple of assumptions:1) You're using hard money, and can borrow about 70% of ARV.2) You'll take about six months close to close.A more accurate way to do the math is:Max Price = ARV - sell closing costs - holding costs - money costs - buy closing costs - rehab cost - desired profit.Sell closing costs are the costs you have to pay to sell.

That is probably just fuzzy math.

However, I heard Suze Ormon give another reason and I just want to verify the math before I get too excited...We've got $2,160 cash flow minus all expenses per month.Is it true we would have to have $675,000 at 5% interest in order to generate the same income and preserve the capital?

An experienced realtor who knows this neighborhood well will be able to help you in that (but do your own homework too--never rely solely on what a realtor or seller tells you).

Wise to be doing your homework first and good luck.

If you do the math, based on the typical rents for an area, you'll determine what you can afford to pay.

That rule of thumb assumes you're using hard money, you will hold for six months (close to close) and you'll sell with an agent.If you're an agent, you'll collect some of the commission on both the purchase and the sale and that might affect your math.

Thanks guys for the wishes.I will keep doing my homeworks and advise newbies (like me^^) in some questions if I can.

But if you can buy in such an area with a 40%+ CAP - who cares if the vacancy is 50% because you are still getting a 20% CAP at that (I know it's rudimentary math, just go with me here).

I've done my homework, have an investment strategy, but nobody wants my money.