The maintenance, repairs, and vacancy can eat up a lot of your cash flow. 

you EAT the decisions of the PM and have liability for the results.With absentee ownership, you may have no choice but to use a PM, but 19yrs being 2hrs , 120 miles away, I created a local team to do the heavy lifting and I did the screening and decision making - - seems to have worked out well (see profile).

How do you proceed when an out-of-state owner says they want to sell, but that capital gains would eat up their gains?

What I can tell you, as a startup, with few properties, the tax return alone can eat up most of, or all and then some, of your profits.  

I would tell them your concern about vacating and you having to eat the costs of an unexpected turn over and that you would like to help them with their new exciting addition to the family as much as possible.

Here's an idea, don't eat paint chips!

A project like this can eat you up if you've not properly prepared all the details.

This makes sense if you are looking to grow your nest egg. 

It will take at least two visits from the pros to kill two generations of fleas after the unkillable eggs hatch.

You could always have your cake and eat it too.