CapRates are also a measure of risk. 

Alright Im a bit confused here on how much value this guest house can add to the property.So the main house is a 2 bed 1 bath 856 sq ft with a detached  1 bed 1 bath guest house is the back yard measuring at 342 sq ft.

No “DTI” Ratio – conventional lenders will require a “Debt-To-Income” ratio that measures all of your income vs. all of your expenses, and can’t qualify under a certain percentage – even if the property should make money on its own2.

Populations are moving within the city (more people downtown/in the city limits than previously), though, which I think could lead to some of the statistics you list.2) Job growth is kind of hard to measure in this area, along with population growth, because it's comprised of so many different municipalities.

Credit score is not a good measure of tenancy.

You made your threat, and in turn she apologized and called you "Mister," restoring you to the full measure of landlording manhood you knew you deserved.

That means you get your returns early.One measure of risk is Debt To Net Worth.

So my long winded question is, in making purchase decisions as a buy and hold investor should primary emphasis be placed on return metrics (ROI, cap rates, CoC, etc), with $/SF a secondary measure, or should it be a prerequisite that the $/SF price be at or below market in order to protect yourself in the case that you need to sell?

Everything is life is measurable and trackable.

@Greg Heden If the money is from a cash out refinance then you are likely paying higher than a 5% interest rate on the money, so you would be losing money if you just leave it in a MM account.ConC return is not a very good measure of a real estate investment (unless you are investing in class C/D and it sounds like you are not), as you mentioned you will also be getting tax benefits from depreciation and those benefits will be at a high rate because of your tax bracket, so I would try to calculate that and quantify it.