If they were renting from a landlord and the property was built in 1893 and/or they were living in a D or F Zip Code and  there were constant maintenance problems, I can understand that.   

@Dor Sagi Thanks, fortunately I haven't had any issues renting out units.

You can't "include" state income tax estimates with federal income tax estimates as the IRS and state DORs are separate and distinct governmental agencies. 

There is a lot of money to be made in D or F areas, clearly it can show the greatest returns, but if you do not buy right, rent right, and manage strongly, these can be a massive money pit.

If it’s one deal and multiple partners check the howey test to see if it’s considered a security and if you need to go through a reg d or other type of offering

Certainly not D or Worse locations.

This particular area is an area that has a fair amount of investor activity (but not as much as the "D" or "F" areas), however I am having trouble finding rentals currently on the market to use as comparables. 

@Glen Doering I'm going through a tape of assets and looked up the borrower on the Missouri courts website which lists all criminal and civil cases and the income tax lien showed up there as a judgment in a case of the borrower vs the Missouri DOR.

I also won't buy in D or below markets.

If an area is a 2-3% rule…pretty likely there are some red flags and it’s a D or lower market or the house needs a ton of work.If it’s a .5% rule, it’s probably in an A market (or not a good deal) and that’s not necessarily going be a great balance of ROI a lot if investors are looking for.Here in metro Detroit suburbs our sweet spot is 1.2-1.4% deals.