I found it interesting, because it expanded the portfolio on a regular basis, but the quality of rental could fluctuate greatly (depending on the capital acquired).Anyways, just tossing it out there.

You're offering up an asset that has a fluctuating and very unpredictable price with no income generation while the remainder of the loan dynamics do not change at all.  

Rental rates fluctuate with supply and demand like everything else.

That said, I question how much of that is coincidental, because homeownership rose for years and has only declined on a macro level for the last four years.Apartment values fluctuate with NOI, which can vary with occupancy, rents, and expenses.

Other benefits of getting a rental property below market allow for more negative market fluctuation so their is less risk.

This is a local market fluctuation that will be slightly different from one market to another.

They might be used to these kind of fluctuations in California and New York but this is not common in Texas.

Her asking prices fluctuate between $88,000-210,000.

SF is a strong market for renting, rents are only going to increase IMHO (regardless of how property values fluctuate), and you live in a highly desirable area.

Seller is carrying back the rest at 5.75% (seems a bit high but no origination fees) on a 1 yr arm (he has one year left on his arm with the bank)...at which point the rate would fluctuate based on prime just like his commercial loan.