I would be leery about buying property in another country where crime, corruption, drugs and general mischief is rampant. 

This section prescribes rules for tracing debt proceeds to specific expenditures.Treas Reg §1.163-8T(a)(4)Treatment of interest expense(i)General ruleExcept as otherwise provided in paragraph (m) of this section (relating to limitations on interest expense other than the passive loss and nonbusiness interest limitations), interest expense allocated under the rules of this section is treated in the following manner:(A) Interest expense allocated to a trade or business expenditure (as defined in paragraph (b)(7) of this section) is taken into account under section 163(h)(2)(A);(B) Interest expense allocated to a passive activity expenditure (as defined in paragraph (b)(4) of this section) or a former passive activity expenditure (as defined in paragraph (b)(2) of this section) is taken into account for purposes of section 469 in determining the income or loss from the activity to which such expenditure relates;(C) Interest expense allocated to an investment expenditure (as defined in paragraph (b)(3) of this section) is treated for purposes of section 163(d) as investment interest;(D) Interest expense allocated to a personal expenditure (as defined in paragraph (b)(5) of this section) is treated for purposes of section 163(h) as personal interest; and(E) Interest expense allocated to a portfolio expenditure (as defined in paragraph (b)(6) of this section) is treated for purposes of section 469(e)(2)(B)(ii) as interest expense described in section 469(e)(1)(A)(i)(III).Treas Reg §1.163-8T(c)(4)Allocation of debt; proceeds deposited in borrower's account(i)Treatment of depositFor purposes of this section, a deposit of debt proceeds in an account is treated as an investment expenditure, and amounts held in an account (whether or not interest bearing) are treated as property held for investment.

As a buyer, I'd almost always prefer the "touch up" or "just replace the plumbing with pex" treatment, especially if it's a pre-war home.My renters (single guys) care way more about things like the height of the shower head and how loud the ceiling fan is than what anything looks like.

On a side note, what about using the "I think my tenants are using/doing drugs in my house" card?

Total costs about 150 bucks in supplies with plenty left over for future treatments.

There are programs for helping first time buyers buy a home, and if you live there for two years, you'll get preferential tax treatment when you sell it.

As a result, a criminal charge was filed against me, and I was due in Court (alongside lots of drug charge cases while I waited my turn). 

People dump trash in front of my garage in the alley and multiple times ive found drug needles when cleaning up.  

I have wondered if perhaps he has a drug problem or some nasty debt that he needed to pay ASAP.

Lending is a little more passive, but you do miss out on some of the benefits of owning real estate (i.e. appreciation, favorable tax treatment, etc) as you pointed out.