If they wait too long, their total profit potential diminishes due to ever-increasing opportunity costs (considering what their ROE could be in alternate property investments).

A lot of silliness is going on, although from what I see, senior lenders are taking a bit more caution which should diminish the chaos.

You will need to get tight with your tax professional to ensure you don't violate the tax code, but there are ways to minimize tax burden without diminishing your mortgage-purposes income.

In super tight markets, the older buildings are being rehabbed, and the affordable rental stock is diminishing. 

If values drop, so does your equity so the amount you can use can diminish.

Additionally, in your case, New York in about the hardest state in the country for most mid-size lenders to get approval in, so that alone diminishes your options considerably.I'd recommend contacting all small banks, and especially credit unions in your area, to explain what you're looking to do.

With little to no value add, the spread will look more like a commission of a couple points rather than some home run and it can certainly hit zero and negative if you over pay or something happens to the loan when you liquidate which diminishes your value like a loan fading from delinquency to default.

I quickly became a 'don't wanter' and bailed (sold) at a small loss rather than having diminished (negative by the model) cash flow long term in a reasonably tough market.

Our society's quality of connection is diminishing.  

I also wouldn't purchase properties outright because it diminishes your cash on cash return, limits your tax deductions, and make you a larger target for more lawsuits because of the high equity positions; additionally, I think you should take advantage of the interest rate environment now while they are lower.