Because so much of your return comes is derived from income - which is inherently much more stable the property values - your total IRR would still be over ~12% if you sold at peak 2009 cap rates. 

Rules derived after multiple deals and a meticulous understanding of your local market are powerful and that’s the ultimate goal.

The question and the formula presented do not suggest a method for calculating NOI but rather show how a cash flow metric is derived.

Unethical in that the fee is derived from the owner's equity rather than an amount of the sale price paid to the owner.

Oftentimes This Number Is Might Be derived from square footage of the house or just simply using the comps in the neighborhood.

Bursting pipes could be a tell-tail sign of other issues and shouldn't be handled lightly in my opinion.Ok..back to the Numbers of this Deal.ARV: $90,000Proposed Market Rent: $775/mth (Also using a Vacancy Rate of 8% to derive EGI)EGI: ~$713/mthP.P. $49,000 financed at your rate and amort of 5%/30 (I'm pretty sure this rate is a little off unless you are putting down at least 20%..but let's run with it)Mortgage: $263/mthTaxes: Estimated at $94/mth (1.25%)Insurance: Estimated at $55/mth (in OH if that's where this deal is of course)Management: 8-10% EGI ~$71/mth (even if Self-Managed should still factor in)Maintenance/Reserve Account (1% Value) ~$75/mthEstimated NOI (Assuming Tenant pays all utilities): ~$418/mth - PP=10.24CAP@$49k or 7.17CAP@$70kEstimated CashFlow: $155/mth (DSCR ~1.59 which is good IF your Loan Assumption is accurate)IF you can get this property, with a clean bill of health, for $49,000 and IF the property valuates at $90,000 and IF you can secure a loan for the $49k at 5% Interest with a 30yr Amortization with only the information you provided and general assumptions, it looks like a potential deal as far as numbers are concerned. 

As shown, the Cash-Flow is a much better indicator of a property than a Cap Rate but it is more difficult to derive as it depends upon an unknown, the mortgage payment and that has other economic considerations.

Ahhh, pretty much)Wall Street (Derivatives...especially new esoteric CDS's, CDO's, etc.,  and ALWAYS GREED)Rating Agencies (not understanding how to rate CDS's, CDO's, etc., beholding to WS Banks)As you can see, there's plenty of blame to go around.

If your IRA is deemed to have reached "Dealer Status", capital gains derived from these transactions could be subject to UBIT tax, which must be paid with IRA funds.  

Sounds great, but politicians wouldn't let it happen, as it devolves power away from them (which they derive from their ability to dispense goodies to favored groups, and to effectively buy votes and maintain theri entrenched positions).