The roof is in decent shape, the exterior paint isn't peeling, the carpet in the house is old and has some stains, the cabinets and appliances are al outdated.So given the above scenario ad using Conv. financing vs an FHA loan ......

I have some minor peeling and flaking that needs to be looked into. 

@Daria B.Livable condition includes things like the roof, plumbing, electrical, flooring, walls, ceiling, no peeling paint and cabinetry being in place and working order for someone to move in without a hazard etc.

be very cautious as you vette them.. but you should be able to get into leveraged deals were your consistently making 50 to 100% or more on your cash.. do that for enough years then start to peel into cash flow units once you have a few hundred grand saved up and you just use a little of that... and or invest with a group and buy repositioning properties that have major upside.. don't get bogged down buying small rentals that have no upside its just way to slow of a way for someone like you to get to where you want to be if your smart enough at 25 to be knocking down 135k a year ) that puts you in the top 3% of all wage earners already... keep focused on that.. remember RE is just not that easy to duplicate those numbers without serious value add..those at buy smaller rentals are looking for a 10 to 30 year plan... and they plan on keeping their day job...

Properties pass inspections all the time as long as there is no peeling or chipping paint. 

Peeling paint, ripped screens, bad roof, broken windows, damaged siding, wood rot, chimney falling down, etc. are all things (and more) that they will cite you on.Personally, actually living in Milwaukee, I prefer rental properties to be held to a standard of decency because I don't want rentals dragging down the neighborhood. 

You are there as an investor to help them sell their house as is and take the stress and uncertainty away by offering to buy.Look for houses with deferred maintenance such as bad roofs, peeling paint, an old driveway, original 1950s windows are great targets.

You have to get in and peel the onion. 

@Danny Duran (my client) and I were in a situation where the mold test during the inspection period determined there were high levels of airborne stachybotrys (toxic black mold) and the seller refused to let the remediation estimators in because they had to wear a mask.  

And the idea that you could peel out your single loan is not likely either.