There are also other factors like recent derogatory trade lines late payments, Bankruptcies chapter 13 or 7 where FHA has a shorter seasoning requirement before a person can buy a home.Both FHA & Fannie will use 75% of the appraisal 1007/rent schedule for the other unit(s) rents to help qualify.

Death, divorce, kids, separations, bankruptcies, desire to sell, disagreements, huge profits, huge losses, life changes, lifestyle changes, and probably plenty more curveballs.Friend going thru some of this now.   

You need the cash reserves or a plan to weather everything that may come.You won't be able to have hazard insurance that pays, so any disaster you either walk away and hope no one sues you or you pay to fix it.If seller files bankruptcy/divorces/heirs come after you for claims you need cash flow and cash to pay attorney/refinance/The greater the cash flow you build up the war chest to deal with problems. 

Hi Cody, here are our rental requirements, we use AmRent screening software.Michigan: We are looking for 600 min credit score, 3x income, no evictions, no bankruptcy within 5 years, 3x income, limited criminal/collection accounts, and a good rental reference.

If I want to contact local homeowners in bankruptcy and see if they'd like to sell, I'd like to read up on it first.

Here is what I did... after life situations that were perfect for a country music song (Heart Attack, Loss of work & Divorce all in 48 hours resulting in a bankruptcy) I was able to start from $2 and no credit and build $2,000,000 dollar net worth in 10 years. 

Your only recourse is to sue the company which could be in bankruptcy by that time and insolvent. 

What if the tenant stops paying you and files bankruptcy thereby forcing you to pay the underlying mortgage even though you have no income coming in on the property?

That is some low-down unethical stuff in my book, when the price tag is high enough to put a struggling person into bankruptcy.

Some hard money lenders are willing to be pretty lenient with respect to previous foreclosures, bankruptcies, poor credit, etc.