I think I was fortunate to find a roll outside of real estate to diversify my income across two different sectors of the economy. 

BUT...if you're American and can still get loans in the US (the silver lining of having to still file US income taxes while living abroad), then why not use leverage?   

The debt to rent income is fantastic, but I understand if the city is not growing.

There will likely be a partnership return required where you flipped a house with a partner and lost $120,000.If you sold the other property within the same partnership, it will also be reported on that partnership return.The net result to you is that you will receive a K-1 showing your income / loss which you then use to report on your individual return.If you made no money within the same year, you likely pay no additional taxes / get no additional refund.Best of luck.

I did most everything I was supposed to do, increase my income, decrease my living expenses, save cash, etc.. 

I like targeting outside of where I would live for SF and small MF (1-4 units) because of the lower entry price, usually higher cash flow since your rental income is higher relative to your debt service, and your appreciation potential is high if you can read the writing on the wall.

Projected annual income is 20% of the purchased price.  

If they pay late now as is, let's say they lose a job or have a temporary loss of income, you're kind of SOL.I would look to build reserves between now and August.

If I read the story correctly, your client did not report rental income.

St Cloud MN Duplex, list/purchase price $259,900market rents $1,610 per unit BUT yes, if one really wanted to sec8 income standards are $1,957 per unit so one could go that direction if wanted be.