BTW, Ophelia, this is not MY bubble to burst, any more than I derive pleasure from painful failure and its manifestations upon any person or group.

My goal is to derive sufficient income from doing real estate deals so that eventually, I wont have to worry about losing my day job and be able to retire comfortably in the later years.My question as a newbie is about my particular situation and plan: I am 41 yrs with a low six-figure income and I have excellent credit.

Try looking here:Calculating a Derivative Capitalization Rate

The seller only sees your Offer and EMD, not how you derived the offer.

I found this chart recently while tooling around online:I found it a bit disconcerting because it basically represents that about 3 in 1000 people derive more income from capital than from labor in our country.  

Or do they lower the tax bracket of only capital gains derived from the real-estate itself?

Also, when you look for comps to derive ARV, do you also look for larger homes in that area?

Additionally the type of asset and how the income stream is derived affects the financing you can get on a property.

If they are advertising "below market rents" it is a sign that the current owner is not motivated enough to move rents, or they are unable to increase rents due to market forces.Once you find out market rent, you can start negotiating on some real numbers.Then you have to do what I call the "simple math" to derive cash flow:RENT - VACANCY(~10%) - MANAGEMENT FEE(~10%) - REPAIRS (~10%) - TAXES(Monthly) - INSURANCE(Monthly) - MORTGAGE(Monthly) - SELLER FINANCING COSTS =CASHFLOW.Note: I'm not sure what your lending situation will look like, or if you intend to do 100% seller financing, so the above may need to be adjusted accordingly.It's imperative in your situation that you ensure a solid positive cash flow.If I were you, I'd just make the offer that you want.  

Is the difference sufficient enough deriving from the Maximum allowable offer for the end buyer?