Look in Arlington, Grand Prairie, The Colony, and McKinney. 1% rule is something that BP made up I think, but in the commercial world we use what's called a gross yield.

Think rust belt to sun belt (a super cycle), think east/west coast high company costs looking to relocate to Dallas to reduce employee costs and be close to key strategic transportation routes (DFW, interstates) linking coast to coast in a few hours.The long term trend of more renters has a lot of legs left (millennials, boomers), cost of a house is going up as well as higher rates so that will continue to keep people renting as well.  

I have some questions as I just dont get some of the details and I dont want to look stupid to the bank.My situation: $50,000 /year salary (gross)$17,000 auto loan ($350/month)$50-$75 credit card minimum payment$0 rent (I live at home with my dad)$12,000 in savingsI want to buy a multi family house around $120K - $150K with an 3.5% down FHA loan.

Grossing around $7k a month, 2 vacancies.

Definitions: 1% test: monthly rents should be equal to or greater than 1% of the price of the asset. 50% test: 50% of the Gross Income/CAP rate (I used 8%) should be greater than the price of the asset.Quick back of the napkin:Gross rent (Owner Occupied): 15,000Expenses (all yearly):Taxes $6,500Management (8%) = $1,200 (You will need to pay for your time as landlord)Repairs (10%) = $1,500Vacancy (10%) = $1,500Mortgage (30, 5.25,20%DP) = $9,500Insurance (guestimate) = $1,125Total: $21,325NCF = 15,000 - 21,325 = -6325 or -527 per month...You would be paying 527 per month or more to live there. 

It grosses $1200 per month and is worth about 175K today (in 3 years).

Mark A.I am not a 2nd or 3rd generation of super rich, I am just an average employee in Silicon Valley, making what would be considered a very slightly above average salary...I bought a handful properties in San Francisco starting in 08, the previous peak, and was losing $1000/door/month for 3-5 years...

So I went the turn key route.I was impressed by USREEB as they have a professional office and employ several employees that know what they are doing.  

The taxes are calculated on your gross income from the rents.

Trying to calculate Cap rate for the primary residence I hold that I am trying to convert to a rental property.Here are the numbers:Original purchase price: $400KCurrent value: $600KCurrent loan amount: $300KPlanning to do a cash out refi to pull out $150K for a purchase of a new primary residence.The expected gross rent is $3.5K per month.Annual expected gross operating income: $40KAnnual expected cost (taxes, HOA, insurance, CapEx, maintenance, management): $20KNet Operating income: $20KTo calculate cap rate what do I divide $20K by?