That said, be prepared to act fast on non REOs, or shell out a little more than usual and bring an inspector during tours.

In short, I can afford the additional $1100/mo cost of a second house, even until I rent it out.I have around $35K in HYSA and emergency funds that I could use for a down payment, but that's less than 20% which would be required for a conventional loan, assuming full purchase price.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

It will be very difficult to cash flow in Austin using traditional LTR methods unless you put down a huge down payment.

Allows rentals to be non-passive.

I've heard there's a good chance the mortgage company won't care as long as the payments continue to be made on time but I still want to protect myself just in case.

My payment after was 3461 rents 6350(with new tenants coming in I raised rents in apts 2 and 3 to 1800/1850 respectively.  

In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%.

They are more useful IMO for getting chunks of equity right off the bat thru value add and then either realizing that equity by flipping it and using for a down payment on something bigger or hold a couple years and then sell at that point to do that then. 

What if the person staying at your place signed a contract but their 1st payment check bounced.