The figure for without compounding makes perfect sense to me.For compounding, I took PPR's example, and calculated the annualized return:With the following numbers:A = $1,431,237.45P = $1,000,000.00t = 3This produced an annualized return of 12.68% over the 3 years with compounding.What am I doing wrong in this calculation (I'm certainly not a quant)?

The IRS generally does not allow you to deduct expenses for a property that has not been placed into service, as deductions typically apply to operational properties actively being used to produce income.

Affordable deals do not typically produce cash flow.  

If you find something that works well as a short-term rental, but doesn't work well for you as a home, you'll have money but be dissatisfied when you live there.You don't even need it to produce a profit.

Some syndicators have so many fees (acquisition, construction management, asset management, capital event, disposition) the syndicator is going to get rich even if the deal produces zero return for its investors.

When you go to sell the property, if you produce a certificate of inspection for the wrong number of units, buyer unless you are giving them a great deal and they will throw caution into the wind, would insist on the correct designations.

For active investments I advocate considering how you can diversify WITHOUT ceding your competitive advantage nor the superior profitability of the niche your in.As an example my business is running an investment fund and syndication high interest commercial mortgage loans secured by income producing real estate. 

It may not get the number of wind/hail storms like TX does, but when the storms do hit in MN, they're usually very large systems, and produce awful hail damage. 

Stats can be foundhttps://www.ramaui.com/housing-statisticsOr for all islands herehttps://www.hawaiirealtors.com/resources/housing-trends-2/Your realtor can produce more specific stats on your area of interest.

I don’t think so, but I’m interested in seeing the evidence if you can produce any.