At the time we had 16 rentals and about half of them were free and clear, and we were buying way less house than our salaries would have dictated for a "normal" (read BROKE) couple so we qualified with no problem.

How much of that comes from appreciation or cash-flow is a mystery without reading their full-reports--a task I'd rather not perform.I'd further assume that if interest rates are still reasonable, and the math dictates it's still profitable, that they will just roll over the loans on these properties rather than sell them. 

You really don’t want the city dictating what you can and can’t do. 

Your background and experience will also dictate your perspective.

Do not allow your tenant to dictate the terms.

This implies we can do X% down, Y% interest; as long as it makes sense from my standpoint I can pretty much dictate terms.My questions are....1.

Availability of inventory and pool of buyers will tend to dictate demand. 

All the houses in the community have wood shake roofs and the HOA dictates that they just be replaced with Wood Shake.

Utilizing the example above, our gross revenue in year 3 is $100,000 because the tenant's lease dictates that their rent is $100,000. 

If the numbers make sense today, that should dictate your decision.If you are doing a buy and hold strategy, even if the market tanks usually rents don't drop too low and you'll have a 1 year lease anyway with the tenant to help preserve some of your rent income.