Cash flow is defined as the cash that is left over after all expenses (real and expected) are subtracted from the income.

I know the 70% rule, but what additional subtraction should I take for the stigma of a fire.

If you have to dedicate land to the widening of the ROW that will subtract from your buildable space.

Look at the ARV and subtract repairs from that.

After subtracting a third for expenses, capital and vacancy you're left with $3200.

Out pops the number and you subtract that from your $500 example.

So we get to subtract 1/27.5 of the cost of the house (not the land) from our rental income each year.  

Leaves you $1600/month.Then, if you subtract the rent you're not getting on your unit, (about $625), you total outlay is $825/month.Jon

Then, you must also subtract the taxes to get your real profit.

Then we subtract the $190/mo debt service payment which leaves me with $197.50 per month Cash after Debt Service (CADS) times 12 is $2,370 per year.Now I only have $3,000 of my own money in this deal which means $2,370/$3,000 = 79% Cash on Cash Return (COC or CCR) per year.