We invest in class A properties, manage from across the country, have vacancy hovering around 0%, invest in appreciating areas so the rent/market price keep up or exceed with inflation maintain our margins and therefore are able to make small margin work.

If you can avoid vacancy/turnover loss, you will come out ok.

Davis about  Memphis because I have a client from Austrialia that bought 4 homes .. its been a nightmare.. vacancies thefts..

You haven't included anything for vacancy, turn-over, capex, lawn care, legal costs (when you have evictions), other utilities (when units are vacant), etc.  

We stop accepting applications after the vacancy has been filled.

I needed the tax write off.Further digging also revealed that most did not understand the expenses that go with real estate ownership, (Management, Vacancy, Repairs, Maintenance, etc), and they all significantly underestimated what it would cost, and/or how long it would take to do it themselves. 

Once you have that then you factor in a vacancy rate (most use 8%-10%) to discount your gross rent. 

With an assumption of $2,500 in rent (based on Rent-o-meter), 5% vacancy factor, $5,500 / year property taxes, $750 / year insurance, 12% maintenance and CAPEX reserve, and self managed you are looking at about $2,000 / year cash flow if financed at 80% LTV, 4.5% interest rate, 30-year fixed.

@Robert Peacock Taking in your expenses, accounting for vacancy, and depending on how you are financing this, are you cash flowing on this deal?

Others have pointed you toward ROE and advice for estimating future rents.For future modeling of low income rentals, the most difficult thing for me to estimate would be vacancy rates.