When I say in the process, I mean we have secured lending, have evaluated and attempted purchase of 1 candidate (couldn't close the deal) and are now moving on to another candidate that we like.I've been reading around the forums about some of the financial evaluations and am working to understand why Net Present Value of free cash flows is not being used more in the evaluation of a property.It is interesting to understand the CoC as an income statement percentage and it is certainly interesting to do some quick calculations with perhaps the 50% rule.But until you take a series of cash flows, discount them by a Weighted Average Cost of capital, and determine if you can clear your next best alternative (stock market, paying down debt), how do you know if you really have a something that will make you money?

The disparity between the two is such that I can't help wonder if there is a cheaper alternative. 

Form what you have said it sounds like the "master lease option" is the way to go to limit your risk so you can walk but give you the upside if your plan to turn around and create equity works.The key even with a MLO is how much TIME you will devote to this property and endeavor versus alternative investments and returns you could be making.

My goals are to build a supplemental retirement income for my husband and I (we are a little bit behind) and to build an income producing career for myself so that my husband can pursue an alternative career and leave his $140000 yr job without much of a change in living standards.

Hi Joan,The property has been held as a rental property and therefore would qualify for tax-deferred exchange treatment under Section 1031 of the Internal Revenue Code.

As others have mentioned, you are giving her a significant amount of money when the alternative is $0.As @Dave Grosse mentioned, don't forget to add your cut into the equation.

The alternative is to refi into a 15 yr note and still maintain $30k in cash reserves.

So if you are truly considering paying down your primary home mortgage as a good alternative to investing in real estate, then you need to hone your investing skills and deal finding skills more before anything else.  

If it's a rental you may want to consider an alternative to hardwood such as tongue and groove laminate or vinyl.Head to one of the big box stores and let them know your situation.

Another alternative is to take the class for real estate brokers, or get the text and read it... the answers may be in there.