The best way to explaining this is for you to download an IRR calculator spreadsheet or build your own simple one and play around with one.For what its worth most deals I deem meeting minimal IRR standards is 13-15% but you have to dig a little deeper to uncover the real placements of cashflows and capitalization events... and then dig even deeper to verify the assumptions such as occupancy, rent increases per year, and what reversion cap rate was used.Again I don't look for IRR cause its manipulated a lot instead I look at total return on a 5 year basis.

For instance, if you had a vacancy in a three unit and had to do a unit turnover for a month, and then you took a month to lease it up (reasonable assumptions), your vacancy would only be 94.4% that year.

Is the software making an assumption about the dealer/investor status?

I haven't heard of any markets where units are renting low, so that's not part of my assumption.

Buffet said famously that his operating assumption is that the USD will go to zero value over the next 100 years.We also like bigger houses now than we did in the 1950s.And then there is migration.

Borrowing your down payment using a HELOC may impact your DTI which could impact your preapproval despite the rental income assumptions from the subject property.Ryan has a house hacking calculator spreadsheet that is way better than BP calculators to use to help you run your numbers.Timeline may be off.

You are making a lot of assumptions from the very little info you have written above.

The third party gets paid in order to negotiate in your shoes with the Seller, this is why a whole sale is typically structured as an assumption on a nominee contract

It seems here that you acquired a $600K property for payment of $100K + assumption of existing loan (was the loan even assumable)? 

Then you factor in an absorption rate for how long to get leased up and determine what IRR you want and price it accordinglyNo similar to if it was new construction / they don’t have tenants but our values.This is where garbage in equals garbage out - if you have solid numbers in proforma things will work it - if not and bad assumptions = bad outcomes