My suggestion is to build a spreadsheet and include the net cash flow to you for every month of the deal, then use the IRR function to figure out your return. 

Include balloon payment after 5 years.

Our current mortgage terms include a late fee after 5 days, so they’re already paying extra each month and have to split the total monthly payment up between 2-3 payments when they get their pay check.

You get a Capitalization Rate (CAP Rate), which equals your annualized return by dividing the Net Operating Income (you had gross in your narrative) by the purchase price.

There is roughly $20,000 left in rehab including windows, floors, a new kitchen and bathroom. 

Your requirements to defer all tax are to purchase at least as much as your net sale. 

Step 1: Get preapproved for an FHA loan for the purchase price you are looking for.Step 2: Connect with builders until you find a few that will finance the construction of your home. 

The risk is not including due diligence caveats in your offer, like inspections.   

Not including closing costs. 

Purchase price: $232,000 Cash invested: $18,000 My real estate investment journey began with a leap of faith when I purchased my first investment property—a charming but very needy fixer-upper in Connecticut.