If I stopped the example here, most would say the portfolio of $100k homes is the better investment.Next, let's assume you decide to sell the Market B homes in year 3 because you are frustrated with the cap ex and management of the tenants in the lower tier houses because you are not achieving the expected cash flow.

I probably wouldn’t mention your third point - it makes it sound like you expect them to hold this note forever and I’m not very certain, but I’m guessing there isn’t a huge market for $100k secondary notes.Have you considered asking them to finance 90-100% for a short period of time so you can rehab and refi at a higher valuation?

Our tenants don’t expect them.

I'd love to utilize their expertise when assessing a property since they are local but I'm not sure what the general expectation is when I don't have a tangible property and I have not entered into contract to work with them yet.Some questions I have are: local regulations/permitting timeline, property's potential from their perspective, landscaping/amenities cost estimate (they also help facilitate this).

@Celine Li Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Take care of any reasonable property related issues quickly and expect your tenant(s) to take care of their responsibilities quickly also. 

They were professional, transparent, and consistently met expectations.

I am also out of state.My 2 cents would be to avoid them if you are expecting prompt followup and communication.

I'm not sure what else to expect.

It just depends on your expectations for what looks like a win.