Hi Cody,If you are purchasing a home at 550k with 30k in renovations needed, with an ARV of say, $600k>= you will lose money.The average cost of sale is an absolute minimum of 3.5% when you factor in the buyer's agent's 2.5%, and closing costs 1-2%.$600k * 3.5% = $21,000 | $600k - $21k = $579,000 or ($1,000)  You would also need to have a broker's license in this scenario as well. 

A lot of my friends would love to jump into this but they have tried to jump in a little too late and have way too much to lose and the risk isn't worth the jump for most.

@Ronak Kotecha if I understand what you’re describing correctly, so you’re saying you are losing almost $400 per month on this rental?

There are A LOT OF TRAPS along the way that can/will make the deal fall through (and cause you to lose your earnest money).

There are A LOT OF TRAPS along the way that can/will make the deal fall through (and cause you to lose your earnest money).

I usually add on special terms, that inspection period does not begin until access has been granted to the property, financials and leases have been given to the buyer, this helps with the urgency since inspection is contingent on these things, so if they take 5 days to give them to you, your inspection starts then, and your not at any risk of losing EMD.

These deals are available due to the shrinking population and job market, but I don't want to buy a house in a declining market that could lose me money in the long term.Are there any signs to watch for or examples of other towns that have been in a decline this long and have come back?

And there's no federal mechanism pressuring states to do something specific, like how if a state's drinking age is below 21 then that state will lose federal highway dollars (fun fact: there is ALSO no federal minimum drinking age applicable outside of federally controlled land, just some highway money that forced all the states to "voluntarily" set it at 21 on an individual basis, I believe Texas was the last holdout, possibly due to oil money). 

Bona Fide leases need to be done at market value and at arm's length, and usually need to be done without notice of divesture (the landlord can't make a new lease with the knowledge that he won't be the one enforcing it because he's losing ownership). 

Most beginner investors lose money or make very little on first deal.