This is the death throws of a geographic market (low end rental areas) when you see 1st month free.

You just said the *MAGIC WORDS* @Justin Silverio     LOLWe are very close geographically.  

@Abdenour ,I would consider a geographic change in your investing strategy.

Thank you for the explanation @Bill Exeter

@Mike H. is correct in his explanation of how low HUD can go in terms of the price.

My biggest lessons learned here were:1) Have more than enough reserves than you think you might need (or quick, reliable access to other cash)2) Know your standards, and stick to them3) Don’t give up long-term goals for short-term gains4) Have an exit strategy/mitigant in place for weak(er) tenants if you do accept them or are in your tenant pool due to geographical location.

If its not based on credit in anyway, can I deny them without giving explanation?

If you're a vet, there are several federal programs for various types of loans.Once you find a niche, I recommend focusing on a specific geographic area.

It's the only explanation that makes any sense.If I could get this place for 40K and put 20K into each side it would be worth $1,300.00 a month rent.

In technical terms, and according to the actual principles you are referring to (again, not sure how it really serves a purpose here) we buy at market value, force appreciation and realize a profit at sale.But to use that as an explanation to teach newbies really does not capture what we really do and that is, buy under what we consider, market value.