Help me understand this please

[Manik Zaman]

After reading the book "Raising private capital...." by Matt Faircloth I was doing a simple calculation to see how much return would investor get back. 

This is considering a 2 million dollar property, 25% down payment, $100,000 renovation cost, 3 year project timeline, 20% equity for me as deal provider.

To me it doesnt makes much sense. I am guessing I am missing something here, anybody could help?

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Property Value: $2,000,000

Down payment and Carrying Cost: $535,000 (25% down plus carrying cost for closing etc.)

Repair Cost: $100,000

Investment period: 3 Years

Sales Price: $2,300,000

Sales Carrying Cost: $125,000 (sales commission to broker 4%, final water/electric/gas/other bills, any other charges)

After three-year mortgage balance: $1,500,000 - $265,000 (principal that are paid off in three years) = $1,235,000

Rental income total at 7% of down payment: $105,000

Total Proceeds: $2,300,000 - $1,235,000 - $125,000 = $940,000

65% of proceeds: ($105,000 + $940,000) * .80 = $836,000

Total investment: $635,000

Percentage on return: ($836,000 - $635,000) / (3 * $635,000) = 10.55%

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[Shane Willis]

Did you calculate the recapitalization of the depreciation and the capital gain tax payout for the project.....After tax returns?