Mathematically, paying it off gives lower returns, but it also may be the thing you need to sleep better at night.

Mathematically it makes sense but does it make sense emotionally?

Projecting this thinking 3,4,5 years ahead lands us at the door of the mathematical concept of Net Present Value (NPV).  

Aly,Mathematically speaking, the notes against our mortgages are discounted by early, and frequent, payment ;-)  On our smaller residential properties we have 5-yr term, variable rate mortgages (prime - 0.45).  

My guess is paying attention to the mathematics mentioned in real estate books becomes more important.THank you for your assistance.

So, yes just using mathematics without calculating for risk, this deal looks to good to be true and as a result, it is most of the time. 

Bob does not like that and says it is wrong.Using it is certainly an oversimplification of the evaluation process but it is a good starting place.Please define your three made up terms and provide a mathematical example of their use to a real estate investor. 

The future market value of a property cannot be mathematically determined or defined because two important factors will not be known, that being the negotiating skills and the position or motivation of the parties in the transaction.The IRR is the flip side of the net present value.

I have a bachelor's in mathematics.

Mathematically, by the time you are done flipping this house and counting your money, you will discover that using FHA is no different than building that unicorn statue and paying cash out of pocket for it.