Thanks for your reply, Thedudeabides. Would you say it's okay for the rent to be less than 1% of the purchase price if the purchase price is about 5-10% below market value?
I would say that depends a lot on your market and future expectations for the market and your neighborhood.
There are definitely some markets where I would personally be very comfortable getting a little under 1% (e.g. Denver, Seattle, Austin, Portland). In this markets, I'd expect to see some appreciation as well, so cashflow might not be as important. However, in markets without much appreciation, I'd expect a bit more cashflow.
It also depends on your personal situation and portfolio goals. If you're looking for appreciation and you have liquid portfolio elsewhere, and you could afford to ride out a dip, then that's one thing. If a furnace breaks and you're having trouble coming up with the funds to fix, then that would be on the other side of the spectrum.
There are some markets where you could do better on cashflow, but for your market that might be a great deal.