I shoot for 1% rule combined with the 50% rule.

@David Ribardo and @Joe C jump in with any edits/comments you might have Purchase Price $149,900 (50K a door rule looks good) Three units total gross/month 2239 (1% rule looks good) Fixed expenses: Taxes 2517, Trash 1125 (375/unit in Allentown unless private collection deal previously arranged) Insurance: 703 Common Electric: 519Water/Sewer: 802Allentown Fee: 225 (75/unit/year) Variable Expenses:  Vacancy: 2239 (One months rent of each place, or 8.3%) Management: 1800 (50/door/month) CapEx/Maintenance: 3000 (1000/door) Total Operating Expenses: $12,930 Total Gross Income: $26,868Net Operating Income: Op Ex - Gross = $13,938 Divide your NOI by the cap rate your looking for and you have your offer price.

You can access the Landlord forms here: www.biggerpockets.com/landlord-forms Please reach out to support@biggerpockets.com with any questions or concerns. 

As a general rule of thumb, an educated buyer will not pay substantially more than the average price for a home in a neighborhoods.  

@Bhaskar Pandey hi, yeah, cash out rules here in Texas are screwy to say the least.

It's not too difficult to find properties in desirable locations that follow the 1% rule. 

I got a lead today from a woman who received a judgement for back due Child Support in the State of Texas. 

However, one thing I would add is that, when vetting a Sponsor/deal, their acknowledgement and analysis of a "bad" situation is certainly welcome.For example, a sensitivity analysis that supports say a 2-3% return even if occupancy and rents don't come anywhere near projections, is still relatively attractive given potential returns on other investment vehicles.If a Sponsor you're considering is all rainbows and sunshine, I would take that as a red flag and move on.

If your property can't comfortably support all the expenses associated with a flip, you're overpaying.

He also said, for that reason, they stopped buying properties in 2012 and pivoted to developing apartments from the ground up.Arguably, they missed a lot of upside with that rule.