Their investment = 30% = .3*145,000 = 43,500

Income from investment in the first year = $850/mo * 12mo. = $10,200

Expenses for one year =

-$1800 + (-$130/mo*12mo) + (-$6160) = -$9520

depreciation of investment = -(2% of house) = -(.02*$145,000) = -$2900

To get the rate of return we divide there net earnings for one year by the total investment

Net earnings = $10,200 - $9520 - $2900 = -$2220

-2220/43500 =0.051