But it illustrated an insurmountable flaw with the service, namely that somebody could take their money back without any say from me, the receiver.  

You say you're making plenty of money, so it sounds like coming up with the larger non-owner occupied downpayment is not a insurmountable obstacle.

I understand it seems a little too good to be true, but if there's no zoning issue, no liens and no insurmountable title issues, is there anything else that could possibly spoil the property's value?

My recommendation is more geared towards those on the sidelines who have done an insurmountable degree of study, with no action yet taken.

The problem is if you do not do your homework, you can get stuck in a cheaper property that is in the wrong area and the losses, vacancy and vandalism will be a perpetual loss that will be insurmountable to overcome.  

Not insurmountable but definitely a factor that needs to be part of the calculations. 

The wealth of information for new investors is insurmountable.

Nothing here that is insurmountable. 

The seller agrees, you "go hard" (lose the earnest money out you back out), and eventually close.In short, with or without an LOI, the contract should always have a DD period with a way out for you if things aren't as presented or you discover a insurmountable problem.

For the seller the problem seems insurmountable, so they sell.