"SoCalMike" wrote in message
news:IHWJc.92072$MB3.58342@attbi_s04...

I've never heard that rule of thumb before. Anyone that uses that as a
rule
of thumb is nuts. The rule of thumb is that each month's rent should be
about 1% of the total value of the property. If it's not, you end up
with
no cash flow, and if your rent is 1/2 of the mortgage payment the other
half, plus maintenance comes out of your pocket. Not very wise.

i bought at $120k... this place will sell for $200k. i pay $627/mo in
mortgage payments. so if i decided to rent this place out, what should i
charge? $1200/mo seems maybe about right, but probably on the high side.
no way its worth $2000/mo.

You are correct, but when looking for rental property, you need to factor in
the amount of rent you could get for it. I tend to purchase homes for
rental in "starter home" areas since the prices are low. If someone is able
to pay $2000/mo in rent, they're less likely to have to live in a rented
place, and are more likely to be purchasing a home. I will look at a house
and do a little research about the area. I will then decide what I can make
from it in rent and I will offer accordingly. There are many other aspects
to consider, but if you start from the 1% rule and guardedly move from there
you're in much better shape.