Handscraped hardwoods in all public spaces, new carpet in bedrooms, new toilets, new light fixtures, kitchen redone with granite counters & new appliances, bathrooms redone with granite, new quality vinyl siding, etc.A colleague (local realtor) on BP sent me a CMA and we both feel the appropriate rent is $1,600 per month.Here's the big question: does it make more sense to keep this house as our first foray into the rental market or sell the house and take the nearly $100k in equity and buy 3-4 more properties with that cash as down payments?

So shouldn't the total ROI be somewhere in the results factoring in the built in equity at purchase of $40K?

If they continue with the mortgage, they would put $2030.13 a year in equity/principal and also pay $4582 in interest.  

If it were me I would determine my ability to raise the rent, determine the cash flow with a 30 year mortgage, and then determine how much of the 50k in equity I would have after paying for real estate fees if I sold.  

After that, properties 5 through 10 you can only do a rate/term refi (meaning you can only pull out up to $2,000 in equity after paying off existing 1st lien).

I realize it may not the big win regarding instant inequity.

Generally speaking, would buy and hold investors consider a purchase of a portfolio of rental properties, 90% occupied, for 85% ARV if that 85% resulted in acceptable cashflow (say $15,000/month) and over $2 million in equity?

I had talked over the summer with Wells fargo who basically would do up to 50K (heloc) on one of the rentals i presented them even though it had over 100K in equity.

Cash flow is simply does the money coming in equal more than the money going out, including  reserves?  

Take your 100K in equity and buy 3 150K homes with 20% down.