It's an estimated cash on cash return given current rental rates subtract expenses assuming 7% interest rate, 10% management fee, 5% repairs, 5% capex and other expenses like mortgage, insurance, tax. it's a estimate to tell you what properties to analyze vs ignoreyou can see the are pockets of negative returns as well as pockets of positive return. this is to supplement the data @Devin Conley provided

Unfortunately, not many around like that...The appraisal is about $150-$200 higher than standard cost because they likely went through an appraisal management company ("AMC") to get the appraisal ordered/assigned.

Without accounting for management fees (I have not yet decided if I will try to self manage), and with planning to raise rents to typical market of $825 for each of the smaller units, and $1200 for the larger unit, does this seem like a worthy first investment? 

I have grown insanely skeptical of BP over the last 5 years, yet somehow I am trying the lead generation for both property management and now as a featured agent.

Your parents can look to reinvest the remaining proceeds into a DST, tenancy in common investment, NNN, that are passively managed.

One of the biggest factors in successful flips is building a strong team: contractors, agents, lenders, and property managers. 

You may get EXTREMELY lucky and find one for 15% (if they get approval from management), but you will not find one for 5%. 

Between downtime doing Self Storage development, management and Country Subdivisions glad to give input on BP. 

Do you think that is fair - to be forced to pay for your manager's mistake?

First things first, when assessing property managers, it is crucial to prioritize their ability to collect rent and manage delinquencies.