If you need 10 minimum and have to hold those non-paying tenants until you get 10, what does that cost you in your financial model?

So far, nothing.The point is that I believe people spend a lot of money, time, and effort protecting themselves against a non-existent threat.

So she's just behind in her mortgage and probably has a notice of default or whatever the procedure is in Florida.Your ability to get a loan for the home has nothing to do with her payment history on the home.  

. $40k will not get you a non owner occupied San Diego property unless you find some unlikely alternate financing.

What if the person staying at your place signed a contract but their 1st payment check bounced.

Can I get a loan for the down payment / construction costs2.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

You might get these days 60% leverage so you'll likely need 40% down payment plus reserves and the financial institutions will want you to keep those capital reserves in their institution.If you are a new investor, there's a couple of opportunities to get started. 

If credit scores are fine, and you are just new to the work sector, then I would suggest doing a conventional loan with a strong income "non-occupying coborrower". 

A “contract to hold” binder payment equal to a month’s rent would also be collected at that time.