. - flashing installed incorrectly around chimney resulting in water damage to roof- outlet burned out due to fire damage- dishwasher circuit wired to other outlets and light fixtures- rocks out in door jamb instead of insulation- carpets buried in backyard only uncovered when installing a shed- boiler worked once (ironically for home inspection) and had to replace hot water heaterThe list goes on.

The best way to explaining this is for you to download an IRR calculator spreadsheet or build your own simple one and play around with one.For what its worth most deals I deem meeting minimal IRR standards is 13-15% but you have to dig a little deeper to uncover the real placements of cashflows and capitalization events... and then dig even deeper to verify the assumptions such as occupancy, rent increases per year, and what reversion cap rate was used.Again I don't look for IRR cause its manipulated a lot instead I look at total return on a 5 year basis.

Your system is flawed, DMM IS inherently flawed and that is why you think the way you think.

Believing we're saints and our partners are deeply flawed.

It worked out well, and we had a good relationship.If you were to move forward on a property like this, during the general inspection, you'd have your inspector check all of the major systems (plumbing, electrical, foundation, roof) for any flaws or obsolescence.

What we have is incredibly flawed, but it's a step towards some sort of transit system so we will take it.

I never point out flaws (like living in filth, etc.)There are good, fair, bad, and very bad experiences. 

Sorry if that doesn’t make much sense, it seems to work in my head so if there are flaws in my logic here I would appreciate some guidance!

The assumption that more beds equals more cash in your pocket is flawed and is unlikely to turn out true.

., There's actually a  couple fatal flaws in your plan.  1.