Once you adopt the premise that there is no rent advantage to a nicer / bigger B class property... the most lucrative place to put your money is where you will spend the least amount for the property, down to the point that the other negative "D class factors" override that formula (dangerous neighborhoods, drugs, and the other "looks like / smells like crap" comments the original poster mentioned.  

But when understanding the formula (Investopedia), what I learned was that you don't include CapEx as part of the expenses you subtract from the total revenue.

I use the 2% formula as a screening tool, but as I've posted hundreds of times, I also do a cash flow anlaysis and consider the equity.

Whatever formula nets them more.

@Greg Scott thank you for the clarification on the Cap formula, that makes a big difference.

Expressed as a %, B.O. shows how much physical vacancy the property can handle to break even, in a worst case scenario.So if the property went down to X% occupancy, the sponsor can still pay all of the expenses and pay the mortgage.The formula:(OpEx + Debt + Fees) / Collected IncomeMost investors would agree anything between 60% and 80% is acceptable.Are you calculating B.O. in your underwriting model?

Calculating IRR is a function of watching a youtube video on how to format the formula and which cash flows to include. 

After a little analysis, those formulas are not quite correct - if your interest rate is equal to CAP rate your COC return can still be less than CAP rate.  

Add in my extra curricular activities occupying so much of my time and you have a formula that makes networking difficult for me. 

If you find the magic formula, definietly let me know.