Using a my quick simple formula for even considering income properties of any kind is as follows.  100% current (never future) annual rent income times 60% divided by the percentage rate of return say for instance you want 5% rate of return then this property would be worth to you $1,353,600 and the owner would have to pay all other encumbrances  Higher than 5% rate of return you want the lower the sales price for the property.  

ARV Practice, please help:I'm still having a bit of issues on getting the formula right on this so that me and the end buyer will both profit from a deal after helping a seller.

I learned how to add formulas to calculate the offers automatically today.

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I'll analyze the potential ROI based on this formula. 

This is a compound interest formula...not a simple interest formula.

I understand it takes time to get accurate numbers because you are sort of at the mercy of the seller , but I am wanting a formula , system or any kind of way to make this process go a bit smoother. 

Debt service / financing costs are not even included in the cap rate formula (the calculation of cap rate assumes a cash purchase).

Is there a formula to base my offer on so I know not to pay too much? 

They use the debt coverage ratio formula to determine if your rent will cover your note and then some.