I ask why and he stated that when the tenants were late on their rent he subtracted the late fees out of their deposit.

Should I include vacancy and maintenance in the monthly expense and subtract it from the cash flow, or keep the cash flow at the higher number (keeping escrow's for the vacancy/repair) when calculating ROI? 

If you don't want to do that, I definitely suggest that you have a CPA prepare this year's return as there will be some extra complications with the property sale and depreciation recapture.Essentially, you get the "credit" for that $22,273 in the year of sale as that is subtracted from the sales price to reach your capital gain amount.

Will they subtract the $150k from the HELOC to give the credit line balance?

Megan Luckily the math part isnt too high level just addition, subtraction, some mulitplication and division but we as a community can all help you through it.Leave the complicated math for the wall street quantative analysts and derivative traders.

Subtracting PITI and OpEx, it appeared that I would still be able to make a small profit with reasonable margin with almost no money of my own in the deal.

If commissions were 6%, which may be high, (many agents are charging 5% and 4%), then commissions were about $23,622  which is split with the other agent getting half and you get $11,800 and that is split with your broker so you get $5,900 - that is about $1,966 per month - subtract gas, advertising, and other expenses and you can treat your client to a cup of coffee and have $0.50 left over.

@Sven SimonI hate bringing bad news but this quote "When I purchase the property, the commission is paid by the seller" is not completely accurate...Commissions are an expense that is subtracted from the sellers proceeds on the HUD1.

To calculate your taxable gain you will subtract the year 5 book value from the $1.2M.

I also disagree on the public price, the public price on a sold home does not subtract credits at least not in my experience.