I'm not sure you are considering factors such as, off the top of my head: 1) unlike the have-a-pulse-get-a-loan scenarios of yesterday, they are required to have proper debt-to-income ratios and meet reserve requirements so as long as they don't lose their job for an extended period, they've proven they can afford the payment; 2) even in a down market, they will have to live somewhere, so unless rents are much cheaper, which is unlikely, it makes more sense to not ruin their credit, keep paying and stay where they are, especially if they've improved the property at all; 3) these loans are much more likely to be 30-year-fixed, not the ARMs of yesterday that adjusted up to a surprisingly unreasonable payment (many didn't understand what they signed up for until, Wham, the payment doubled on them, so they had to walk); 4) they pay MIP, upfront and monthly, so there is some protection for the lender if they do default.Many of these people would be stuck paying much higher rents, building others' equity instead of building their own, without FHA loans.  

It seems that to calculate actual returns, you need to of course factor in your acquisition costs,  but also the servicing costs.

Great job at making the neighborhood more beautiful.  

Factors include proximity to retailers and how noisy the neighborhood is.Employees ultimately weigh about 15 variables when calculating a bid price, the monthly rent and renovation costs.

Have no idea what his screening process was like and other factors that may have affected his experience though.This is secondhand - not my personal experience - so the facts may not be 100% accurate, but something I would have never considered up here in the 'burbs :)

High unemployment could potentially be a factor driving NOI's of properties down, therefore decreasing your purchase price.

There are things that do factor in a flip.

One risk factor to be aware of is that you will basically have close to 0% equity in the property though in the event you should decide to liquidate you may have a hard time getting out of the deal unless you have a plan to force some appreciation quickly. 

So for instance if the seller is saying a 7 cap but then taxes go up 20,000 you are not buying a 7 cap but much lower with the higher cost factored in.

It's easy to blame mistakes in rehab estimates or estimating ARV for failure, as those are things that you can blame on outside factors ("My rehab estimate was off because of all the surprises I ran into when we opened up the walls!"