Max upgrade to get highest market rentOnce you find the gross rent, subtract 45-50% for expenses.That will give you a net rent number.  

It subtracts operating expenses. 

Then subtract remaining loan balance on the first mortgage to see how much of a loan is possible.

Example, if we want to FLIP, we start with the final sale at ARV, require a margin of profit, work through the rehab expense, subtract costs of sales (one at each end) and the project the first purchase price. 

Do I subtract out only the annual interest payment, or the entire payment including principal and interest?

Subtract 12 percent for PM, 1200 for taxes and 2000 if I want to be safe for repairs and capex (not including turnover expenses) and 600 for insurance.

I agree with @Anton Ivanov  His numbers are more accurate, and use his rules of thumb.Here is quick way to analyze....Take the rent subtract the vacancy rate, then subtract 50% This is your NOI....Divide that by the purchase price and this gives you the cap rate....Not that is matters much in single family homes....but it is a good gauge...I don't' buy anything less than a 12% cap....Cash on Cash return and total returns are calculated totally different, though very important, I don't think it will come into play with what you are doing if you are buying SFH.

If taxes are 3400 I would subtract that from my mortgage and count it as part of the50%.

Without getting too long winded, to calculate cash flow in the real world, subtract the mortgage payment (P & I) from 1/2 of the rent.

It looks comprehensive but I don't even understand what all the numbers mean.I did my own using excel but it only covers the cost of the mortgage payment, taxes and insurance (this cost is subtracted from the rental income).