You can also subtract financing costs from the NOI to determine your cashflow, ROI and ROE.

My personal preference is to look at investments as best I can over a long period of time, so my preferred metric is Return on Equity (ROE).House hacking, more than maybe any other style of REI, reveals the power of leverage.

I heard there was some talk about getting rid of Prop 13 or overturning it...but I doubt that would happen.I imagine home prices would go down a LOT in CA if that happened..especially in the more expensive areas.

I'm new to the investing side, so I am speaking as a business person here.Greg is right about any family coming in to overturn the deal, be sure you understand who will swoop in after her death and try to get the property and your deal overturned.If you are in no hurry to get into the property, then maybe you can structure the sale in one of the following ways: (1) possibly a sale at a fair negotiated price, with a leaseback provision, (2) sale at a fair negotiated price, where she carries the financing so you pay her a monthly installment and she can afford the assisted living facility, or (3) have an attorney create an agreement of sale that you and she negotiated a price and if that agreed upon price is at least, say 80% of FMV on the date of death, her heirs must honor the agreement and sell to you at that price, or give you a first right of refusal to purchase the property for say 80%, of FMV on date of death. 

ROE?

If I do this repeatedly it could be overturned and I could be classified as a dealer as it appears those houses were really inventory and I did not plan to hold them long term as an investment because at that point I'm makng more money on the sale.

I would like to keep it and raise the rent; however, my ROE would only be around 4% with the increased rent.  

Other good measures are IRR and ROE.

Break-even (after factoring 7% ROE as a min).

From a ROE standpoint you are better off being leveraged as long as you are getting positive cash flow.However, as you acquire more properties the price of your debt will be higher if you are leveraged more.