Ok.....so I havent taken the leap of faith just yet and bought my first rehab.  

That kind of good faith typically goes a long way.

I know not to place much faith in the pro-forma's, but they do give me somewhat of a start. 

1 to 1.5% fee upfront PMI6+ months reserves for HOA, Taxes etc.Monthly PMI - forward reserves on that to+lender fees underwriting fees ...and moreReward - High LTV - Weakened underwriting guidelinesThe catch...your paying all kinds of closing costs - and if you just put those funds towards the down payment instead of handing them to the Fair Housing Admin...to insure the high LYV - you could get a Fannie or Feddie deal with a reduced LTV...because the funds were put towards the balance.Just a thought - but FHA is around because people do need it and the LTV's are enticing.The lender is required to provide you with a good faith estimate - this will give you a good idea on the costs.I hope I answer both questions...The Agent Center

But the lender lent the money in good faith.

It's more about finding the deals and not creating them.Creating deals isn't part of our business model when buying.When liquidating, however, the concept of "creating deals" comes back into play when we have a borrower that's making a good faith effort to resolve their delinquency. 

I mean, they did sign leases in good faith.  

Congrats Michael for taking the leap of faith that many investors fail to do.  

Obviously, the best case scenario is we buy it, he pays rent faithfully for the next 5-10 years and then we sell it to someone else who will take him on.

The most successful investors know how to let go of control & have faith in the relationships they've built.