It should be calculated without debt service to calculate the return.

However, the mortgage broker I use is able to count the income of my rentals against the debt.... so I continue to bump against his DTI limits, but as long as each investment makes sense and has decent returns, I can continue to buy.  

I sleep very well at night being debt free

Our credit scores are excellent and our debt to income is good.  

Plus the bank will devalue your cash flow by debt to income, forcing a 25% vacancy on it.  

Most leases you sign have a clause in them protecting the landlord in a situation where the landlord is unable to deliver to you possession of the property.

Our nets were amazing becasue we had cash flow, appreciation AND principle pay down all for very little work.Personally I love going into a place that I can leverage my money and than have my tenant pay off for very little down.I LOVE leverage but hey were are 1.3 million dollars in debt.

The investors got possession of the buildings by just paying the taxes owed against them.  

As long as you have a 12-24 month history of renting the property most banks are able to cancel out the debt obligation when considering you for another mortgage. 

Even if they hadn't trashed up the place there would have been paint anyway.You need to find properties where your 50% of your rent is enough to cover your debt service.