Because so much real estate in the US or Canada wouldn't be profitable without ultra low interest rate (as many investors are discovering lately), we are obsessed with getting cheap financing.

Lower interest rate at 12% is $8,400 year ($42K for 5 years) plus his initial investment of $70K equals $112K.

Additionally, they have another property which has appreciated in value, carries low interest rates, but has negative cashflow and essentially feels like it just locks money away.

Most seller's in a sub-to don't understand the risk they are taking and most lenders have concerns over the overall portfolio quality ratings which has an impact on their cost of funds.

My gross income is a bit less than $7k (and I'm renting near top of market rates) with minimal repairs ($2k/y), but...1.

Seems to be in line with market rates. 

Companies are having to set aside a certain percentage to cover the Cap Rate insurance and as an abundance of caution with these interest rates- class B are paused.

With some of the new properties they find they are getting great interest rate buydowns from builders. with equity of 1.2M you have many options on where to move. 

Bought house in 2020, so instant cash flow given the low rate and price.

Unfortunately, I see a growing trend of a lot of service members renting their homes at break even rates or at losses.