Investors base their purchases on potential, but appraisers base their numbers purely on formulas and comps.

@Tim Delaney you asked what the return on equity would be and I'm not sure--I don't have that formula in any of the books I've purchased.

Are these markets dried up until the rent to price formula evens out a bit more down the line (if they ever do)?

I do think the MTR/STR mix makes the most sense for Austin - MTR most of the year but switch to STR to maximize during the hottest travel months (spring for SXSW, fall for ACL/Formula One/UT Football)

I heard a guy on Bigger Pockets video give a formula to use to consider if you should sell: If your equity is more than 7 years of cash flow, then you may want to consider selling to get your equity out. 

. $550  / mth * 8 unit = $4,400 * 12 mths = $ 52,800 GRI  ****not $53,800****The formula for CAP = NOI/PriceNOI = [GRI - V&C loss + OI] - EXP  *****You did not subtract for expenses to arrive at NOI nor include a vacancy and collection factor****Assuming expenses are 50% and 100% occupancy (which 100% occ is not realistic all the time).

But keep learning that Jimmy Buffet song, “Living on Sponge Cake”.  

There is more to the formula on how much you can bring in, assuming you're self-employed.If you're an S-Corp, you can do the 23k as an employEE, then an additional 25% of your salary on top of that, with a maximum of $69k total. 

Bottom line: make sure you have an active, documented role in management, and you don’t get compensated using any formula that plugs in the amount of money that you raised.

The goal is to get in their world, see how they operate deals and follow their formula.