In order for me to gauge PMs and manage them and hire and fire them, that's all basic people management and business principles. 

It also matters if you make any principle extra payment,.

You can certainly debate that the tenant is paying down the principle and that you get to depreciate and get tax benefits, however you can still get all of those things by buying in a market that makes sense. 

Here's the graph, with explanations and assumptions below (for the personal finance geeks):REI Total Return - 3 years:Cash Flow: $25KDebt Paydown: $26KForced Appreciation: $50KMarket Appreciation: $30KTOTAL Return: $131K return divided by $215K principle = 61%SPY Modeled Return - 3 years:TOTAL Return: $38K return divided by $215K principle = 17.6%Definitions: Principle - defined as the total money left in the deal.

Add in depreciation benefit, principle pay down by the tenants and if appreciation is giving you anything at all, and you're doing quite well as @Brant Richardson says.  

It now has ~$400 cash flow and ~$600 principle pay down each month. 

I wish I had found mustachian principles 10 years sooner.

Take this as just my opinion.Here is how I would view the deal: correct me if I'm missing something.maximum possible rent is about $3550subtract 30% for vacancy and maintenance leaves $2485 for principle, interest, taxes, insurance, and your cash flow. 

Without all the details, it's hard to say if you offered too little ... but on principle, if the seller didn't take your offer right then out of relief for finally being free of this house hassle, I'd say you offered too little.

@Lou FrancisI like a balance of paying interest and principle.