I will tell you what lenders are looking for is safety.

Thing is I'd have less cash flow (but still would cover mortgages and have some cash flow even after budgeting for expenses) and a higher interest rate than the sweet 3.xx rates I have now and less margin of safety in some ways.

As long as you are patient and willing to wait for a "good deal" and not just the first thing that comes your way, there is money to be made and you can still protect yourself from any type of market correction.  

I know the West New York and Fort Lee areas are expensive but if you are patient and due your due diligence you will find a property that would work for you.  

He can get sued for fraud if he knowingly covers a health or safety issue....not sure what the laws are in Illinois, but Alabama is a buyer beware state, so it may be hard to actually win - but sounds like the buyers would have a pretty good case.

@Katherine Earle  there you go you answered your own questions... you go there over see it protect your cash and hopefully you find the market fruitful.last little tid bit that most of us West coast investors learn the hard way.ARV and what a property will actually sell for to a home owner are two very distinct things.west coast properties sell within 1 to 2% of list or over list.properties in the mid west will have ARVs but offers will always come in at 10 to 20% under what your ask is and it can take a loooong time to get them sold and closed.. so be patient and be realistic.. make sure you can make a profit at 10% under ARV

I am not in a rush to make the big flips yet, I want to be patient make as few errors as possible.

The Dodd Frank Act has brought up many issues along the lines of predatory lending.The CFPB outlines the "ability to repay rules" if you are selling with some kind of rent credits on a lease option.If you want to keep total safety in your real estate investing, use a lease and a ROFR (right of first refusal) when you lease.  

Its hard to be patient when you have money to spend

That being said, I think it's a great area to invest in SFH and if you are very patient, a good multi family may come on the market.