I would suggest you run each of these properties through a calculator/analysis to quantify the cash flow potential after acquisition and renovation.

While there is a definite inherent risk, much of this risk can at least be quantified if not mitigated with proper legal protection for all parties.The real problems in these occur, as @Jay Hinrichs mentions, when they are used as a business model to purchase properties with little or no equity and either lease/purchase then out or wrap a low down payment owner finance sale around the original note.  

It's far more analysis than necessary, but we're software geeks and this was a way for us to become intimate with the mathematics of the analysis.On smaller residential properties (1-4units) the {discounted} CoC over the planned hold period of the property is our lead metric - once the thresholds required for purchase & financing are met for all metrics (DC, BER, PI, etc), but this needs to be tempered against many other {not easily quantified} factors: location, state of (dis)repair; can we expand; is their a future higher use for the property.On the commercial buildings (5+ residential or mixed use ... we have yet to venture into retail or office) the CAP rate is more meaningful, along with the CoC, but you still have all the subjective aspects as well: location; opportunity for forced appreciation/performance improvement; financing availability/terms; building age and repair; environmental, etc.So, as Duncan was telling us yesterday ... it's not that simple ;)

One thing to consider, it's easy to quantify returns on investments.

That's where you would really make your money on a buy like that.The easiest way for an appraiser to quantify the amount of money that has been spent in a renovation is to spend it on the kitchen and the bathroom(s).

The answers to these questions can't easily be quantified in a spread sheet so it's really just a judgment call on your part.Also, what's your goal with this property?

It's hard for me to quantify the value of getting the capital returned sooner - that's why the higher IRR.For me, if it's between this and a good Multi deal where i'm going to get depreciation plus 20% total annualized return, i'm taking the multi deal w/out question.

Calculate and quantify your costs and benefits before getting too heavily invested in a single Park.  

Depending on the type of investor financing you are seeking, credit scores/creditworthiness is certainly one of the several factors you will be quantified by (hard money being the exception).

Of course, the difficulty here is determining how much to increase the discount rate to account for the risk you can't quantify.