@Glen Smith I think you should talk to a bankruptcy attorney. 

Don't invest with your sister.Look for for sale by owner properties.You might want to consider bankruptcy. 

Not sure about bankruptcy protections, but maybe a lawyer could tell them how to keep their home and lower the payments.  

Same for the person who had to file bankruptcy. 

Plus, depending on her situation, she could end up filing bankruptcy on what she owes you.  

You can require a credit score of 700+, income 3 times the rent, no criminal history - at all, no evictions, no bankruptcies, excellent landlord references for the past 3 years, proof of steady income for the last year. 

I haven't invested in Vallejo for quite some time and it is one of the few cities in CA that claimed bankruptcy during the downturn.  

Any bankruptcies, collections, late payments, judgments etc?

Bad scenario #1 is having a major capital expenditure once you move into your new houseBad scenario #2 is losing your job and having to live on no incomeReally bad scenario #3 is both happening at the same timeCataclysmic scenario #4 is both happening at the same time with no money because you spent your last dime on the house (also called bankruptcy)

But, you can require good credit and good references and no criminal and no bankruptcy and no eviction, etc.I just recently got my Section 8/HUD voucher.