So basically I got 2.9% return.You are bad at math my friend. 

Lets do some math, You have $40K to purchase which likely means $35K when including closing costs.  

Margins are tight and screwing up the math or having unrealistic expectations will end you up in trouble pretty quick!

We avoid lending to folks that don't really have their math/numbers together.

I'm a local Denver agent primarily, but I'm familiar with some of the challenges up in the mountains because no deals make sense running the quick math. 

You take English, Math, Science, etc... 

I recommend a simple spreadsheet to check your math and it will make it simple to adjust each year.End the complaints.

I’m not 100% sure I fully understand the math behind it (the 75% LTV ARV part)—would you mind sharing a quick example to break it down?

Unless the borrower is self employed and takes a lot of expenses to show lower income on their returns then it usually makes sense to pay a couple thousand a year in higher interest (you can pay like 4,000 a year in additional interest for DSCR if you are saving 30+k on your tax bill kind of math lol)

There's no blanket number that will make the math very easy.