Adam, with $1800 gross rents and $120k purchase, you are at 1.5% rent to acquisition ratio.

I live in the Midwest, so an avg/decent income is 50k a year.I have 2 currently, that gross cash flow, 500 a piece, after mortgage,taxes, and insurance.

.- Gross rents collected $3400 X 12 =$40800- Taxes $5600 (2014)- NOI = $35,200- all units have separate meters .- Rents are low because tenants have been there for a very long time and are no headaches.- Market rent for a 3 bedroom $1600-1700- Market rent 2 bedroom $1100 - 1200- Offer $400k- 25% DP = $100K- Commercial loan $300K- 30 YR loan- 7% IR- DSCR $1995 X 12 = $23,940- DCR 1.47Thank You !

The "gross cash flow" being used is actually "gross income".

Could we then decipher the NOI for the potential effective gross income and capitalize it?

A slightly more conservative rule of thumb is to assume that 50% of the gross scheduled rent will go to vacancy, expenses, and capital.

So if a buyer were to hypothetically purchase your unit and the mortgage payment, taxes, insurance, and HOA dues were 1250 dollars then that buyer would need a min of 1250 X 27 = $33,750 gross income annually to qualify.

Am I correct that about 10% gross rent is the typical fee for PM's?

PriceDwn PymtClsing CostsCash Dwn2nd Loan Units$ Per UnitAvg RentGross Inc.OtherAdjusted gross incomeVcny Lss1 Mth Mortgage1 yr mortgage2nd Loan pymt.TaxesIns.MgmtMaint. / repairsWater / utilitiesOperating expensesNOICAPMonthly incomeOccupancycash on cash return$144,000$0$4,744$148,744$04$36,000$513$24,600$0$22,140$2,460$0$0$0$1,050$780$0$2,000$2,642$6,472$15,66810.88%$1,306fully rented$137,000$34,250$4,680$33,000$5,9304$34,250$475$22,800$0$19,380$3,420$552$6,621$1,258$1,050$780$1,454$2,000$2,642$7,926$11,4558.36%$298fully rentedThe first line is all of the information that they had listed on the MLS.

To create a Margin of Safety we model a maximum Break Even Ratio of 85% (BER = Total Debt Service + Total Expenses including CapEx reserves ÷ Gross Operating Income).