.- If you want to factor in your equity/principal paydown to ROI, you can do a return on equity (ROE) analysis:ROE = Cashflow / Equity (again, typically over standard period, like one year)- I also like using IRR to model long-term holds -- this number is typically more relevant to what landlords are trying to accomplish (compounded returns vs simple returns and factoring in when the money goes in and comes out). 

IRR is already a compounded annualized return that assumes all proceeds are reinvested.

You've already made mistakes for whatever reason, don't compound them by stepping over a dollar to save a dime.

Go ahead and sing one round of kumbaya for every layer of insane risk the OP is asking about, then triple it because the problems he will face compound exponentially. 

The floors are wet and bowing from the absorption of urine.

Say you make 20% compounded and double your money in about 4 years. 

No experience on my end, but looking at it from a financial point of view, depending on your age and retirement goals, it may not make much sense to take 401K money out to fund rentals unless their cap rates are really good.Depending on the amount in the 401K, it may be able to compound and provide a much higher ROI in future years than cash flow on rental properties could.  

The center of the roof is actually bowed inwards from the weight of a sizable amount of standing water, and the home has been vacant for upwards of 3 years.  

According to my rudimentary math, I would need to earn about 21%  compounded annually, to gain the same dollars by keeping.

In the residential mortgage space, interest is compounded semi-monthly, not in advance and amortization are 25-years or less.