They weren't bad deals because of a formula error.

Here are some examples based on common interest rates:At 5% interest rate:Monthly payment for 40 years interest-only = $2,083At 6% interest rate:Monthly payment for 40 years interest-only = $2,500At 7% interest rate:Monthly payment for 40 years interest-only = $2,917--------so 40Y 10YARM vs 40Y IO: $1 LOL :)----------------------------------draw amortization chart for 30YFRM with 7% rate every year for $500,000 loanHere is an amortization chart for a 30-year fixed-rate mortgage (30YFRM) with a 7% interest rate on a $500,000 loan:YearBeginning BalanceMonthly PaymentInterest PaidPrincipal PaidEnding Balance1$500,000$3,326.98$35,000$5,369.82$494,630.182$494,630.18$3,326.98$34,624.11$5,745.73$488,884.453$488,884.45$3,326.98$34,221.91$6,147.93$482,736.52--------------draw amortization chart for 40Y Interest only with 7% rate for $500,000 loanTo calculate the amortization schedule for a 40-year interest-only mortgage with a 7% interest rate and a $500,000 loan amount, we can use the following steps:During the interest-only period (first 10 years):Monthly payment = $2,916.67 (7% annual interest rate / 12 months)Total interest paid in the first 10 years = $291,667 (2,916.67 x 12 months x 10 years)Loan balance remains at $500,000 during the interest-only periodAfter the interest-only period (remaining 30 years):Monthly payment = $3,326.89 (calculated using the standard mortgage payment formula with a 30-year amortization period and 7% interest rate)Total interest paid in the remaining 30 years = $496,869Total interest paid over the full 40-year term = $788,536Loan balance at the end of the 40-year term = $0 (fully amortized)The full amortization schedule would look like this:YearInterest-Only PaymentPrincipal ReductionLoan Balance1-10$2,916.67$0$500,000------------so if you use 30YFRM an sell within 3 years; you are making additional 18k profit guaranteed compare to 40Y IO.

Enron was legit at one time, Theranos had good intentions buy you can barely get hydration from protection from a drop of blood when donating plasmaDue diligence means I don't know maybe visiting the properties to see if they exist or not.

Get lined up with a good contractor and I think you have a winning formula. 

What are the essential metrics and formulas you use to analyze potential deals? 

This ranges from a quote that resonated with me, to formulas/rules I want to memorize, and foundational vocabulary and concepts.

There’s no secret formula out there, you will find it near impossible to cash flow with these rates almost anywhere in the greater dmv, you can put more down, you can eat negative cash flow, you can invest in another market (I like the eastern shore, though even there you are probably breaking even at best) or you can put your money in a different asset class, the market decides your return’s for the most part, not you. 

Cash-on-cash return = Cash_Flow / All_In_Cash_InvestmentYour formula is calculating NOI / All_In_Cash_Investment, which completely ignores Debt Service and Capital Expenditures.Better you make these adjustments now in a spreadsheet, rather than later on in your bank statements!

@Christopher MooneyHere’s my take …Looking at the book in the NOI section:     Cash flow after taxes = Cash flow before taxes – Income TaxIf by “Net Income” you mean “Cash flow after taxes”, we can restate the formula as     Net Income = Cash flow before taxes – Income TaxThe formula applies at both the portfolio level and the individual property level.Since you have taxes of $3,000 at the portfolio level, and if you know the “Cash flow before taxes” at the portfolio level, you can determine the portfolio “Net Income”.If you knew the “Income taxes” and “Cash flow before taxes” for each individual property, you could calculate “Net Income” for each."

This means that the income from the property can pay its expenses and generate a pre-tax profit.DSCR formula: Add up the expenses tied to the property (monthly taxes, monthly insurance, monthly homeowners association dues if applies, monthly principal & interest payment.