I'm an investor, not a lender, not quite sure if this what you are after, but I use a CAP Rate Analysis and where am I breaking even on the cash flow, then how that interim affects my debt to income to the break even. This allows me to decide whether or not it's a good deal. Does this help?

I rely on the Net Present Value when applied towards the income over the fixed period and residual value.

The CAP Rate is a good please to start, as well, but my investors want a more accurate view.

People act on instinct not based on facts.  When I tell them the cap rate is high (>5.5%, typ 2%) and has postitive cash flow, they react very different.

They go to Texas, Nevada and tell me they can get a home for $90K in the slum getting no rent and should listen to me in their own turf.

CAP rate is a good starting point

Annette Lawrence , Palm Harbor, FL 727-420-4041 - not there, yet. Though some 'training classes' taught me, it should be CAP rate.

My investors look at their cash flow.

Around 6 works in my area but it does depend on many more factors and local indicators as to whether it is a good investment.

Cap rate and internal rate of return.

This is just one of many factors.

Income property is not my expertise so I will defer to others.

It is not based on income, it is based on cap rate, cash on cash, and internal rate of return which also an eye on appreciation. No one in my 26 years of doing this suses the formula you are suggesting. 

its subject to local formulas and rules of thumb with variable factors

For a SFR, you can use NPV or cap rate -- but one of my favorite investor clients uses a simpler metric that works for him . . . 100x the monthly rent, gross. That usually ensures him a double-digit yield after costs.

I use the cap rate analysis also.

The ones I've purchased were converted by me into income producing.  Haven't gotten to the other aspect yet.

I let my accountant figure that all out.  That is why he gets the big bucks!

Annette, I leave this analysis for my commercial broker associates.

What is your investment objective? With interest rates and cap rates so low presently, the future could be a shocker! Tread carefully! 

I think it depends on your investment strategy.

I will look for the answers here.

NPV works for me - I find the cap rate very misleading in my area however

Our investor Buyers look for CAP rate of 8 or better

CAP rate analysis as others have said.  Most of my investors are buying to rehab and re-sell though.

I have a homemade spreadsheet that includes the cap rate, condition of the property and several other factors.

Each property is fed into this and compared.

If they pass this and my instinct test then an offer is written.