(Basically Section 8 doesn't want the tenant paying more than 40% of their adjusted income to housing expenses).And there's a whole bunch of other factors, like number of dependents, child care expenses, etc. that play into the formula.

Investing is a craft, not just some formula.

First year may be on CoC return..But what formula do you use to track positive or negative performance in the following years?

That is because part of the formula depends on their risk pool and payout history.

I tell him he should put a washer/dryer in each unit,  and turn the basement into a separate one bedroom apartment, maybe 600 square feet of living space     I am trying to figure out what the correct formula would be. 

Cap Rate formula needs Purchase Price but I don't have Purchase Price because that's what I'm trying to calculate...Does it seem like a vicious circle to you?

I can definitely say there is not a magic formula but experience with winning and losing in markets helps discern what works and what doesn't.

I can definitely say there is not a magic formula but experience with winning and losing in markets helps discern what works and what doesn't.

They now have a limited number of rental licenses they allow and there is a formula to how many STRs can be in one area. 

So, the formula states the property should bring in 1% of the sales price in rent.