The taxable gain is calculated as the difference between your net sales price and your adjusted cost basis (original purchase +capital improvements - depreciation).Depending on these factors you could actually have a much larger (or smaller) tax from the sale. 

Due to some factors, budget mainly, we were looking at class C- and D type homes in our target area.

After all the renovations, if I decide to keep it and rent it by the room, it'll probably still make about 30% ROI without factoring in the appreciating and loan paydown.

Are there any other factors you guys consider in deciding a property or location that can come up with a higher cash flow.Buyan

Most caps you'll see in SD range between 3 - 4.5% depending on a multitude of factors, location being a big one. 

If you buy mostly off-market you'll get zero commission, so a major factor for you will be if you plan to shop mostly via the MLS (which can be a good strategy especially for SFH where the data tends to be better quality). 

If they move out you will most likely need to do some renovations and find a new tenant so factor in time where you need to cover the cost of the house and renovations.2) since you just refinanced, based on the current market value, is it worth doing it again based on the current market rates and the equity you have. 

Keep in mind if you need to do work like waterproof the crawl space that could cost several grand, and factor that into the price. 

If you don't have students, it's a good excuse for a quarterly inspection.Related to this, I estimated how long it would take to paint based on my previous experience painting and didn't factor in how much cleaning I'd have to do.

If you plan on proceeding with this purchase I would factor in a complete re-wire.