In general, UDFI is income (including the passive types of income normally excluded from UBTI) derived from debt-financed assets. 

Reed's "Positive Cash Flow" article:Positive Cash Flowand Ray Alcorn's article on derivation of a real world capitalization rate:What

I'm not challenging your statement I'd like to learn what it means and see how you can derive those numbers.

It is the income that the IRS will look at closely.Also, as a husband and wife team, if the husband works a full time job and the wife is a stay home mom (for sake of this example), the wife could spend the required 750 hours per year on RE and make money doing it, thus have more income derived from RE than anything else (which in this case is nothing as a stay home mom).

I would re-institute the Glass-Steagall Act, up-tick rule, and raise the balance sheet capitalization requirements for any institution allowed into the FDIC program or use the Fed window, and clean-up the GAAP, they are broken.I would bring all derivatives and Hedge funds under regulation and stop the financial madness that is at the root of the credit crisis.

Stop using anything made of plastic or derived from petroleum.

The reason I say 75 to 80% is becuase this is essentially a commercial property and clearly value will be derived from ROI.

Even with inflated Gross Incomes and artificially reduced Operating Expenses derived from “La-La land†Pro Formas, these property still boast single digit CAP rates… as if they are proud to offer a property at 7%.

Within investing, most of the time a normal person invests in stocks, bonds or derivatives they will loose.

Take a few days, or even a few weeks and come up with answers derived from deep thought.When I have received enough replies to this excersize, I will give additional input and also share with you my answers.