In reference to my personal "magic" formula for rentals, it is 2% of sales price should be the monthly rents, or taking it from the other side, I am looking for a monthly Gross Rent Multiplier (GRM) of 50, or more commonly expressed as an annual GRM of 4.2.

Keep that formula and you will surely go far.

MikeOH,You have to understand that when dealing with clients they like to see formula's and figures laid out in front of them.

When I started I just factored backwards to what I would make on the deal and decided whether that was enough money or not.I know a lot of new investors brush over the 70% of ARV minus repairs formula, but it really is where you need to be.

Closing costs when you buy it need to be factored and initial financing fees if you are financing it.When you are factoring sell price (ARV), you will need to factor off of that realtor/advertizing fees to sell it and ALL closing costs when you sell it.The 70% of ARV minus repairs formula adequately factors in all these factors.

Buying properties for a low enough discount would be one of the main things you would learn after doing a rehab or two on your own.In a normal market, a good formula for a rehab is taking 70% of After Repaired Value (ARV) and then subtracting repairs from that number.For example if the property will sell for $100,000 all fixed up, and it needs $15,000 in repairs, then you would take 70% of $100,000, which is $70,000, and then subtract the $15,000 from that.

Here is what I am doing now.I poll from three locations electronically and take the blended #I use my local realtor to pull comps within 300 Sq Feet of the property I am looking atI look at the assessed value.Then I take those three numbers and blend them for an average.If the number is still under 70%, I will look into it further.Does anyone have a better formula?

Can someone please explain the 70% of ARV minus repairs formula?

Even in an EXCELLENT rental market, it is very difficult to get $100 per unit per month positive cash flow if you are including the real expenses and not using some silly guru formula.

Thanks for the welcome....I sell all sorts of home gadgets the best thing Ive put into a home yet is called Sonos....Incredible home music server system thats inexpensive and allows the homeowner to play 2million songs from the rhapsody server..My dad and I have an office building in San Bernidino, Ca.