I would imagine if the OP received a credit at closing for the security deposits (with estoppels etc) and then placed the exact amounts in the proper accounts from day 1 himself, he wouldn't be liable for the fact that the mom and pop had commingled and converted the funds long ago.

To the original OP: I'm not pointing anyone out that has replied to your question but the truth is, you can run all the models and valuations you want, all looks good and then something happens once keys exchange hands.

The OP stated the tenant is intending to leave at the end of the month.

Sure I could have made more if I could have timed the purchase so that they did not depreciate 20% but timing this is difficult and being wrong could cause you to miss a lot of appreciation.To answer the OP question: I do not believe we are a peak but if the prices fall I will be purchasing and if prices do not fall I will be purchasing. 

Sure enough 24 months later it appraised for 1.8x what I paid, but the cash flow just wasn't there.To actually provide a little cash flow, the mortgage shouldn't be more than 50% of gross. 40% is op expenses and cap ex over time, (50% if you use a PM).

If you're looking at co-ops then most will want your housing payments to be below 28-30% of your gross income, and your total debt (housing, credit cards, loans, etc) under around 33-35%.

I wanted to try and connect with as many people as I could who are active on BP and working in the Kansas, KC/KCMO, Wichita, OP markets.

To recap, first, the OP wrote: "She was going to check on how that would work for the numbers and reported back to me that 20% down would be needed on a (owner-occupied) 4-plex!"

The OP is talking about a resale restriction when buying a Fannie REO/short sale, not the fha 90 rule for an end buyer.

OP   look at Klickitat tons of low value properties there that could probably be bought for tax's  sleeper would be Wakiakum county