Most mortgages have a "due on sale" clause, which means that if you transfer the property the balance of the mortgage will be due.  

I try my best to balance everything, and for the most part it works like a fine oiled machine, but there are times when I start to drop some of the balls I am juggling.  

The house still has a mortgage balance with an rate of ~6.26%.

It is considered a contingent liability on your personal balance sheet when you go to fill out a PFS or personal financial statement.  

They then want me to remove the asbestos my self and pick up the balance of the cost.

It's the same as buying any other house with a mortgage.....the owner owns it, if there is equity they pay off the mtg balance at closing, if no equity it is a short sale, and RM's require a price of 95% of a current FHA appraisal if it is a short sale.  

Use the 2% rule as a guide for checks and balance.  

It's good risk management to have the 30-year mortgage and the flexibility in case your rents ever go down, or you have a really large capital expense (e.g. you have to replace an entire HVAC system).Lastly, seek out a portfolio lender (a.k.a. balance sheet lender).  

Flip2freedom episode 77http://www.flip2freedom.com/a-3-step-formula-to-a-successful-balanced-and-insanely-profitable-2012/ - LISTEN TO THIS TODAY!

It's a seller's market right now but I expect things to balance out next year.