I would then find a 2-4 unit deal that I could put down a 3.5-5% down payment on as an owner occupied rental.

I have construction loan on the current house I'm building and used similar strategy (land was purchased outright and used to cover majority of the down payment).

I can make the down payments in the smaller market on cash-flowing deals, but these bigger markets require 40-70k to make a deal the conventional way, and I just don't have that to invest.

If anything is obvious like a solid proof of more people living in the house or signs of smoking in the house or if she misses even one rent payment then start the eviction process.

Not plus 40k.  40k down payment. 

Those willing to go beyond that could be good partners for real estate investors.Traditional banks/Local Banks and non-bank lenders - If they are a portfolio lender, meaning they actually hold on to the loan and don't just collect your payment, then they have the ability to be flexible.

It is difficult to decipher whose opinions, judgements, and authority are fiduciary.I do believe it does take money to invest in real estate - not necessarily for a down payment but to have sufficient reserves for the investment (which does not seem to be discussed much).

If you sell a property, and do a 1031 exchange with the proceeds, but don't need all the proceeds for the down payment of the next property, are you taxed on the additional profit that isn't part of the exchange?

What I love about Baselane is that it was built BY real estate investors FOR real estate investors so it's really dialed in to what you're going to need in order to prepare your taxes, keep your books up to date and the more operational aspects of being an REI like tenant vetting and processing rent payments.

Just curious - what sort of down payment do you usually require of US citizens?