It’s a non emotional formula to get you to a goal.

It would be pretty easy to add a formula along the bottom of the Pro-forma chart dividing your Return each year over your Cumulative Equity in the property and seeing in which year that number peaks. 

Also is there any calculators or formulas I could use to figure out my closing cost?

So, using the current owners model of 25% of AVM (comps are in that $125-179 range) for a comparable house build on those lots is not a good formula?  

I'm not saying you shouldn't be conservative and take those numbers into consideration...but everyone has a different formula that works for them.

I am a new investor and I have been taught the formula goes like this Income-expenses = cashflow but, my question is do you pay taxes on that “cashflow” ?

My take on it is if you are going to have multiple properties then use the same formula to project all the expenses that includes vacancy and repairs+cap ex, you can choose the percentage you want to use.

Build in a buffer into your formulas when looking at and evaluating opportunities and you should be able to stay relatively safe.Happy Hunting & Good Luck!

@Bodhayan SharmaRules of Thumbs are back of the envelope formulas which gives you an idea, but you need to do a complete analysis to get a more precise answer. 

For example, if a free and clear absentee owner calls about a property that is in good shape and is currently rented, do you still go for the 65% less assignment MAO formula, or, since this property would sell to a landlord, should my offer be based purely on the potential cash flow (i.e. 50% and 2% rules)?