That's why you come back to the value of $3.4M.But note that there is a lot of confusion about cap rate. 

Are the rents and utilities billed separately or combined into one monthly rent payment (for efficiency and less confusion for the tenants)?   

I can tell that your understanding of taxation is not wrong at the basic level and that is normal as taxes are confusing and complicated. 

To avoid confusion, my rental agreement states that the deposit is a nonrefundable holding fee until the date the resident takes possession. 

My biggest confusion at this part is the specific numbers, at the moment utility bills like electric/hydro, gas and water.

I’m a bit confused how the cap rate calcs are off since my formula looks like what you described...do you think it is a rounding error? 

To clarify one comment, which I realize now may be confusing. 

Could you be confusing your fact with the sunset extension of the bill that made our notice period 14 days and requires landlords with 4+ to offer a payment plan?

This confuses them.

Hello Adam,First, run your numbers with one unit filled, add like 1.5% to your interest rate for PMIThen run your numbers as if the property was rented on both sides, add like 1.5% to your interest rate for PMIAfter this you will see "okay year one I lose x%, but in year 2 I gain x%"If this is all confusing I can hop on a quick zoom call and show you how I do it.