You stepped on a land mine there.

Many bidders are from out of state and don't want a condo/land, etc. out of state.  

As long as you and your CPA maintain thorough and accurate records, you should be in good shape.

When a seller has a mortgage on the property you can't do a lease  option for more than 6 months but you can do a Wrap or Land Contract.

You can deduct expenses like mortgage interest, property taxes, insurance, and repairs, as well as depreciation on the building (but not the land), which helps reduce your taxable rental income.If you refinance, any interest paid on the new loan would also be deductible.

If the FED successfully completes a soft landing what changes?

I sell land to homebuilders in Southern California, so I've seen, over the years, how some stub their toes, etc. 

It is illegal to discriminate against a tenant based on their source of income so I would advise against even mentioning this in any way shape or form.Are you qualified to purchase expensive RE?

Owner-occupied = Better shape – They treat it like home, not just an investment.

My plan was to buy, improve a bit (house was not in bad shape, just need some TLC), and rent out and hold at least 2~3 years.