Am I more likely to be able to add $50k or $100k of value above cost in a high Cost RE market or a low cost RE market?  

I'm looking at monthly cost to seller vs. anticipated rental income, purchase price relevant to the ARV of the area and interest rate, balloon, etc.

So about 8 houses per year will do ya....but don't forget your costs of doing business AKA overhead....Very good point!

Why would you do anything that effectively pays you less than that?

The management company has replied that they don't coordinate with neighbors and just want me to cover the cost of all the repairs. 

Here is an example of what it costs you to avoid professional advice.

Items such as this that could be easily replaced by almost any LL at a very minimal cost, will turn into a $135 aggravation at best if you overlook it!

One month of vacancy will cost you $2,600 + $200 utilities.

Yep, off water, but with nearby water access and view seems to be the same ROI considering the cost of the property. 

Sub2 is a risky strategy for a long term buy and hold as the longer the deal structure stays in place, the higher the chance that issues will arise (like issues with the loan servicer, insurance, seller filing for bankruptcy, seller dying, seller realizing their DTI ratio and ability to buy their next property is negatively effected and becoming upset about it like in your case, due on sale clause being called, etc.).