The most-accepted method for finding this kind of deal is to do mail lists or call lists of current owners - that way, they already have you in mind when they are looking to sell.The best way to get good returns on a property like this are to:Find an off-market seller through the above-mentioned methods, and negotiate a deal that is win-win for you and the sellerFind a property (on- or off-market) that has room for value additions, either through growth, increasing income or decreasing expenses.Most properties that are on the MLS market will be competitively priced, or will need work and are thus value-add opportunities and will not be great deals from the beginning.

I know I always ask myself if I can stand a 20% decrease in collected rents (vacancy or lower rents, it doesn't matter).  

Then the rent from the two additional units slightly decreases rent from the existing building portion to maybe 1600, but then I get 1500 for each of the two new units for a grand total from the completed building of about $4600/month against total costs of about 1600 per month (not including fix-its, but most of the building is new so this is minimal).

The thing that has me scratching my head is that there has been a noticable decrease in the number of REOs coming on the market, while the number of lis pendens filed in my county has remained the same (roughly 2k/month).

I've grown to a point that I am looking to streamline my business, and its worth giving up my equity for the consistent low hassle payment.Remember, also, one of the major downsides of carrying notes is that your equity will only decrease from that point on.

Will this decrease the value of the home?

I believe that the trend of low inflation/deflation and decreasing wages will continue.  5-10 years from now I see advances in automation that will increase deflation even more.Most people on this site will tell you to shoot for at least $100 door in cashflow and the deal will work.

And I could argue that adding texture should DECREASE the total price of the job, as it reduces the amount of required skilled labor.$30-35 per board doesn't seem too bad in a more expensive market (especially the lower end of that range). 

Actually the home is decreasing in value now, because of low interest rates.

When I was a city employee, my health insurance premiums were deducted right off of the top of my gross pay, thereby decreasing my taxable income a bit.