This is 100x more true if the property is in a C or D area.I'd suggest reading up on the topic on the forums, where you'll find many examples of inexperienced investors crashing and burning hard trying to do OOS REI...the story is usually the same--they had no experience with REI, they couldn't find any cashflowing properties locally, but they saw that properties in other states (often the Midwest) cashflowed well on paper.

After all expenses I've shown a loss on my tax returns the last 2 years and it wasn't just a paper loss.

Yes, you'll be paying mostly interest rather than principal paydown starting out with the FHA loan hence the better play for you on paper but maybe not on the monthly.It's not too risky so long as you pick your market(s) and do your numbers right.

I would definitely plan on using credit cards for any purchases when I would go to keep a paper trail.

And on top of that, i am being told that even though the tenant has been living in my unit since end of June, and all the paperwork was submitted SEVERAL times over the last 7 months (with a paper trail to prove it) that they will not pay any back rent.

I was doing pretty well with my existing properties in San Francisco Bay Area and Indianapolis suburb, all Class A, higher income tenants, oldest property is built in 1957 and 1961 (local so I can check on these every week and they are all up to code) and 2005 (Indy Class A)I bought in spring 2023 a Class C property in Indianapolis for $130,000 which was supposed to cash flow on paper $176 a month at higher interest rate.

A lot of real estate in D and F areas look great on paper but come with a lot of unexpected issues.

Go back and look at your loan papers and look for the mortgage insurance disclosures and how that is calculated. 

While the intent was good, you should have been more involved and the lawyer would have explained the variable rate when you signed the papers-along with your banker. 

Not the end of the world as long as they can manage well and deliver what was promised on paper).Happy investing 👍