This doesn't mean you should jump into whatever deal you encounter.

However, you should have air-tight legal agreements that cover any and all scenarios that you are likely to encounter while owning/managing the property.

Search the BP for ADU appraisals to encounter numerous examples.

You also have to review the application before accepting any fee from the applicants; if they don't have sufficient income, or some other item disqualifies them on that application, you just explain that on the spot and don't take money (or the application).I have encountered a few lookers who thought that there is money to be made on collecting application fees.

One challenge I suspect would be the state tax implications we would each encounter if investing in multiple deals per year in multiple states. 

With 25% down how can they know you won't encounter stalls, using credit cards again, and asking for extensions?

We have encountered this a bit in our up and coming neighborhoods. 

You'll certainly encounter plenty of wholesalers there.  

They made the repairs and now are left with a hefty windfall.I know that this is not the end all be all place for tax advice, however, has anyone encountered this before?

The cash flow may be there in the short run, but you’ll encounter problems like increasing HOA fees, slower appreciation, and difficulty selling or renting out the home.