Perhaps a seasoned lender can step in and correct me if I am wrong! 

I do hope that attorney on this forum will chime in and correct my unreliable layman's interpretation.

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.We use the following to rank Property Classes, in order of importance:Property Tenant Pool: closely linked to location, but not always.Property Location: closely linked to tenant pool, but not always.Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”Key metrics for each Property Class:Class A Properties:Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.

Additionally you can always write in what was done to correct it and explain that since then you no longer had issues. 

That being said I still had to monitor him and make sure he did the work correctly and not just lip stick on a pig.

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.We use the following to rank Property Classes, in order of importance:Property Tenant Pool: closely linked to location, but not always.Property Location: closely linked to tenant pool, but not always.Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”Key metrics for each Property Class:Class A Properties:Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.

While I agree having it in the contract would keep this from happening, you are correct in saying the security deposits do not belong to the seller.

And if the housing market stays in correction territory (by # of transactions) then they may even consider adding to their treasure trove of Treasuries (say that 5 times fast).

It works just fine if the operator knows what theyre doing and structures it correctly.

You are correct about that, but that's usually a computation and decision that an investor makes after a couple single-family homes or small multis.