I' m not sure if the payment numbers and "Add back: Principal payments" numbers are correct.

That amount can't be less than the monthly housing payment (principal, interest, taxes, insurance, mortgage insurance, and HOA fees, if any).

If our yearly principal portion of payment was say 30K, only 25% of that would be taxed at CG rate since 50% of it is basis and 25% has already be taxed at recapture rates?

Principal is not tax deductible.

Scrum is based off some of the principals that made Toyota great.

Their return is about the same with little cash flow but they are building principal pay down and are passive versus active with multifamily.

One unit has a signed lease, the other does not yet)Here is how I analyzed the property to determine the cash on cash return of 11% (let me know if I'm doing this correctly):- Purchase price: $140,000- Loan payment: $509 (principal and interest only). 

Licensed principal broker and experienced investor here - I'll PM you. 

Principal Broker,  in Queens New York, Specializing in Sales, short sales, foreclosure properties, property rentals and management.

Any excess funds can be kept as reserves, or to lower the principal.