@ Jon, if I allow 50% of my average gross of 1,450 (although my PM is a personal friend and works for cheap) it would be 725/mo.

Cap rate = net operating income / purchase price.Net operating income is your collected rents less all expenses and capitalExpenses are things you buy in one year that the IRS lets you deduct in that year - taxes, insurance, property management, utilities, pest control, legal fees, cpa fees, make ready costs, damage in excess of securities deposits, mileage, lawn maintenance, snow removal, etc, etc.Capital are things you buy in one year but have to depreciate over multiple years - roofs, appliances, carpets, sewer lines, furnaces.Debt service - your principle and interest payment - are NOT included in this calculation.The 50% rule says that vacancy, capital and expenses will average to about 50% of the gross scheduled market rents.

I have one I bought for 10k that I am all into for 18k that is rented for 900, I am closing on one Friday for 22k that is already fixed up, that I will rent for $1100/month, and I bought a third at auction for 5k that only needed cosmetics and a water heater, that I am all into for about 7k that is rented for 850 per month.Total monthly gross income on the 6 properties $5,750 (69,000/year).

The current yield of the asset, which is gross and you should look at getting a mortgage servicer, is around $14.34%.

That doesn't mean the parties still can't sue you and come after you if they can prove false pretenses and gross negligence.If you are in a mess right now you need to have a litigation attorney review your paperwork for exposure and course of action steps.

I door knocked and found deals back in the day before the RE crash.I made about $30K GROSS on my listings and they were all standard listings.

Here is something I found quickly:2.5 RatioMany mortgage brokers will tell first time buyers they can "afford" a mortgage 2.5 times their annual gross income.

You should have a quick read up regarding expenses, there is a generally accepted guideline that 50% of gross rent will be payable in some form of an expense over the life of the property.

Lease Comps assumed to be $2k/month=> Annual Gross Potential Income = $24,000=> Rough Estimate Of Annual "NOI" = $12,000=> Rough Offer At 10-Cap = $120,000Less $25k in repairs=> MAO = $95,000Since this is roughly half of what they are asking I think it is probably a waste of time trying to make a deal work, but you never know.Use this search:What's It Worth - Deriving YOUR Capitalization Rateand read Ray's article.

Again, there is gross disparity between financing and rent rates.