We are currently selling this home to allocate our gains to a down payment. 

My initial cash-on-cash seems low, but I can't tell if I have too many dollars allocated towards property management (I'll be managing it myself), CAPEX, maintenance, and vacancy.

so for most of us in the start up phase capital needs to be allocated where its going to do you the most good... and if you have no deals that's where I would allocate capital.. then once you have some deals under your belt and some real assets and net worth to protect then you can look at all the advanced vesting strategies.. at least that's kind of how I would approach it.. 

@Jarrett Gilliam - the IRS allows a reasonable allocation.

When calculating Capital Expenses in a rental property without doing rehab, let’s say your driveway will last 5 years($5,000), roof 3 years($4,000) and you decide to rent it out, after you replace it will you have to recalculate Capital expenses on the property to see how much you will now have to allocate monthly for those expenses? 

@Eliannah LinehanBe careful how you are calculating CoC.Cash Flow/Cash Invested.In your unlevered example, your CoC return in Y1 is 15.38%, not 23%:$22K Cash Flow (or NOI in this case since there is no Debt Service) divided by $143K Cash Invested.If you put a loan on the property, you would subtract the Debt Service from the numerator since Cash Flow will no longer equal NOI, and you can subtract the loan proceeds (after closing costs) from the denominator since you will no longer have that cash tied up in the investment.A couple other things I'm noticing:1) You may want to factor in a CapEx/Replacement Reserves allocation to more accurately project your returns.

@Sam Va be sure to allocate the correct amount to building and depreciation versus the value of the land.

Overall, you should always allocate reserves to account for vacancy and CapEx. 

Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpusI'm still researching but it looks like a legal way to defer taxes.

Adjusted basis is original purchase price plus improvements less depreciation.Assuming the seller allocated approximately 20% of the price to land and 80% towards the building - his adjusted basis is approximately87,000 - 28,000(depreciation) = 59,000Gain would approximately be$75,000 - 59,000 = 16,000(capped at a maximum federal rate of 25%)If the property is located in Arizona - the seller may also have to pay a state income tax which ranges from 2.59% - 4.54%.