If I was working with a client who didn't have a lot of money up front, I would probably charge a smaller flat fee in advance to cover my risk, with an additional contingency when the deal is consummated. 

Based on those contingencies and a formal offer letter that is accepted, I almost have a deal done.

should i get a pre-approval letter from my loan rep, make an offer on a house contingent on selling my primary? 

Are there any pitfalls/ contingencies/information I should definitely be aware of before considering this route? 

Third, is it still possible to get inspection contingencies when landing an off market deal through a direct mail campaign with a seller?

Casey, It is legal nationwide to wholesale however make sure to get all purchase agreements/assignment contracts reviewed by a local attorney to ensure you have the proper verbiage & contingencies.

Make your offer contingent on the seller obtaining the correct zoning @JD DiGiacomandrea .

I've heard people refer to the return on T-bills as the risk free rate, but even that's contingent on the government remaining solvent :)There's no way I'd go through the trouble of operating income properties for a 10% return either.. and I'd like to assume most others wouldn't either.. although seeing some of the price to rent ratios for recent sales around the nicer suburbs in my area makes me question that assumption sometimes...All in all the thrust of the argument was that a reasonably competent investor should not have much trouble securing, at the very minimum, a 10% return on their capital without taking on excessive risk or administrative burden. 

If you want you can also go into contract before your old property sells as long as the close date for the purchase is after the close date for the sale.Use contingencies. 

"Quick close, no contingencies" often gets deals at a discount that others miss.