Other factors which are not easily mathematically calculated is that a nice place will likely have less vacancy, less maintenance calls, is more 'rentable' (faster) and decreases liability... so in the back of your mind you should keep this formula in mind but a 12% is not too bad.

An investment needs to make sense mathematically.

My background is mathematics, engineering, and education.  

History geography, mathematics, science, and literature are all essential skills that you will use in your real estate investing career that will amaze you.

Quit thinking mathematically, think behaviorally.  

I've never seen or heard of any personal risk assessment mathematically but lets take a stab at just some of the variables, it's on you to weight them numerically.

Understand: these guys use it to compare different projects, although the IRR is not the perfect mathematical tool for this comparison.

The poor initial cash flow market typically has good appreciation and rent growth outlook.The market with the higher rent growth will always eventually be the better cash flow market (it is mathematically the case) which is why coastal southern CA markets have historically produced great cash flow for long holds.  

I have a strong mathematical background but not well applied and I am lacking in the more technical terms. e.g. 

That said, there is areas in explosive growth pattern, support by planned city development, and for the smarty-pant's who put int he work to know those plan's ("ehe-hum") appreciation becomes a mathematical item vs guess-work.