This will work for a lot of people and is a simple calculation.

If I was calculating this one as a percentage, it likely would not be the lowest as it was purchased for $167k.  

The profit would only be calculated after all cost to include closing cost (realtor commissions included) were deducted.

You mentioned a house price of 400K and a monthly rent of 2.5K  If we calculate based on these figures, then your rental yield is only 6.25% (2.5K*12/400K)(2.5K×12)/400K×100% = 6.25% Generally speaking, an ideal rental yield is around 8%-10%Consider renovating and upgrading to increase rental income or using financial tools such as mortgages to optimize cash flow.

You need to look at the property and calculate what it is worth to you and offer that.  

even with higher rents once you calculate in the taxes, insurance and PITI based on the price its little to No cash flow.

So would i structure how long and how often like " property generates X per month, monthly payment to be 50% of X for however long it takes to pay it off (would calculate)?

I'm curious if any of you have a spec home construction cost and profit calculator that you would recommend? 

View report*This link comes directly from our calculators, based on information input by the member who posted.City is in the Northwest Arkansas area.

The math gets a bit more complicated to calculate the adjusted deduction but the minimum is $1050 (scaling up with earned income).