the value added versus cost to add, especially in single family zoned areas, typically results in a large negative initial position.  

Underestimating rehab costs - get a contractor bid.5.

There is a monthly fee associated for this but if the tenant is serious you can offer it to them at cost.

Renting to Section 8 Long-Term TenantPurchase Price = $250,000Renovation Cost =$3,800Appraised Value = $270,000Monthly Rental To Section 8 Tenant = $2,800Monthly Mortgage Payment = $2,100Monthly Reserve for Maintenance and CapEx = $200Monthly Cash-flow = $500Another investment property was closed and added to my rental portfolio.

Lost $3k in the initial cost. 

We did consider/evaluate that option, and have done multiple flips, but at those points have been under contract since New Year's Eve and carrying costs for another 2-3 months without a guaranteed sale is not the risk we want to assume.

I was planning to send letters explaining the higher cost in taxes, market rents in the area, and then offer a gradual raise to meet in the middle somewhere.

Then if I have additional concerns I call in an expert to get further information and an estimate on what the repair will cost.

Though I am unsure how I would amortize the up front remodeling costs for P&L, tax accounting.2) Interest only loans term loans -  Would allow current owner to have cash flow on the property, without eroding the asset value. 

Renting to Section 8 Long-Term TenantPurchase Price = $237,000Renovation Cost =$8,950Appraised Value = $310,000Monthly Rental To Section 8 Tenant = $3,215Monthly Mortgage Payment = $1,890Monthly Reserve for Maintenance and CapEx = $200Monthly Cash-flow = $1,125Another investment property was closed and added to my rental portfolio.