The appraisal states that fair market value is only $1150, which is actually less then they rent for now.My real estate agent has already provided the bank with several pieces of evidence illustrating that this appraisal is wrong.

Below is an article illustrating learning from people smarter than you.http://www.biggerpockets.com/renewsblog/2015/06/20/5-reasons-joining-mastermind-group/

These results are illustrated as follows.Amount realized

If you refinance that amount (with costs coming out of your pocket or via a higher interest rate), PI at 3.5% for 25 years on $183.5K is $919/mo.PI decreases $24/mo because you've extended the loan by one year but didn't cash out or raise your rate (in this illustration).  

Below is a diagram illustrating the cost difference between direct vs. turnkey.

Can someone paint me a scenario using numbers to illustrate what a good RE deal looks like?

Here is a story to illustrate: Gary was a new investor who worked as a business analyst and had recently received a six-figure inheritance.

1) Since your distributions and net rental income never tie when it comes to equity syndications, let's just assume for illustration purposes that without accelerated depreciation, your net rental income would have been 10K.

For illustration purposes, I'm going to use the $5/month number, but it works with either the math is just simpler with the primary residence numbers. 

Of course, the past is no guarantee of the future but, as this example illustrates, fortunes can be made by simply postponing gratification for a little while.