In many cases your income from the 1099 side ends up being closer to your net income than your gross (even though from a W2 deal it uses gross) but there are add backs and subtractions.

They just subtract mortgage from rent and assume that's what they're making on the property.

Plus, the way a mortgage works, is you are subtracting the interest from the back end, which are the months with the least amount of interest, and you're taking money out of your pocket to do it. 

For an investment property they let you take the value of the home, lets say $100,000 for example, subtract the price of the land (maybe $20,000), divide that value by 27.5 ($80,000/27.5  = $2909), and substract that from your taxable income for the year which saves you money on taxes.

You then can ask the project manager to help revise it, modify it, or add or subtract to or from it.

If you take up one of the units, you need to subtract the amount of rent you would otherwise be paying to come up with your final numbers. 

If you subtract the mortgage payments from the cash flow (without debt), but multiply that new CF by 5, you would end up with more cash flow than if you spent your cash all in one place.If you don't, then you're buying in the wrong market.

Also, aside of noise issues, the main reason for the regulations is to prevent landlords to raise rental rates and subtract properties from the long term rental pool.

Your ARV depends entirely off how much YOUR rehab is going to cost; ask the top three RE investors in your area what they pay for ARV, then subtract 5% for margin of error. 

What you can do is gather all the income and expense numbers that you can from all the data sources that you can, subtract your expenses from your potential income, and if the number at the end of the formula is one that makes enough sense for you to make that down payment, then there is your answer.