I don't have the experience to know if new furnace/water heater/windows/appliances would alter the appraised value to make this a rational deal under these circumstances.

If we have a 100 year history of commodity prices hovering within a certain level and a current price 70% above the historic baseline, it means that the market for this commodity is not rational in any way, shape or form.

Hopefully, your "fair share of horror stories" will help keep you rational.

If they were provided a list that said they didn't leave any damage, I don't see how you will rationalize keeping the deposit, unless you are claiming undiscovered damage.

Think of it as flipping "cash"...using the properties as the vehicle your cash is riding...in and right back out of these deals (with friends).That is how money works...and it follows Golden Rule #1 of my 2 Golden Rules of REI:"Under no circumstances, ever, for any reason or rationalization, ever....EVER,...Spend your cash.  

I would think that the big hurtles would proving my NOI could cover debt service coverage ration, and getting an appraisal that would establish LTV.

Modesto is finally seeing the recovery the rest of the state has been enjoying for years, so the price-to-rent rations "at home" are no longer so appealing. 

Now that you have some experience, you should be able to rationally look at a deal and prepare for uncertainties.

I am probably pre-rationalizing to justify a giant apartment in a war zone. :)

A CAP rate is a historical performance ration, often misused as a forecasting tool.