If they can tax you/bill you in some way they absolutely will.

I would definitely look at AirBNB and VRBO and see what is out there in your area and what they bring in.

Hi Andy, You are absolutely right—don’t do it.

Tenant Default: 0-5% probability of eviction or early lease termination.Section 8: Class A rents are too high and won’t be approved.Vacancies: 5-10%, depending on market conditions.Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.Tenant Default: 5-10% probability of eviction or early lease termination.Vacancies: 10-15%, depending on market conditions.Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years.

However, the book was written when home prices were close to half of what they are now, and interest rates were half of what they are now.

They are hovering around 11%-12% right now...usually with 2%-4% in points.

They are independent. 

For example, I live in Gilbert, AZ, which isn't exactly the cheapest place to live, so if I begin to look for a house here in AZ are the lenders going to want to see 300k-400k$ in liquid assets for me to get approval for a mortgage (as the homes in my area are around 800K-1M)? 

There's usually a good reason why the entry points are lower.

I'd say 1% deals are going to be more of an appreciation play rather than a 2% deal which will undoubtably cash flow.