You get higher rents and on top of that because tenant mix is stronger usually with national tenants you could then likely sell at a lower cap rate for a higher price point value.

We are starting to look in some lower income areas and are wanting someone to handle potential problems.

(Loan program, term, credit score, etc) just for hypotheticals, say your looking at a 30 year conventional on your primary residence with 720 credit, rate could be ~4.75-5.125%  FHA is typically a little lower. 

Also, using percentages for repairs/CAPEX on these lower class properties might get you in trouble.

Very good job getting the reserach part down.Now you need to focus on buying the first investment- You need to decide- do you stay in CAlif and bank on further appreciation, or do you go midwest and get cash flow and lower entry costs.Its nice to diversify (I have both) Specifically Temecula, CA and Indiana.The local ones in Temecula have great tenants, stay a long time and pose few problems The lower income ones in  Indiana has a much higher cash flow, but also have their share of evictions, and issues.

But He took a while to make his mind as as a 1st time home buyer I lowered rent to $1495 in panick it wouldnt rent at all by the time he came back.

Great job growing quickly with super low cost properties.Just don’t forget that there will be bumps along the way, especially when dealing with lower income housing. 

Save up the money, improve your credit score, and buy smart.You can get lower down-payment deals through owner financing but it takes work and patience.By the way, don't make the mistake of spending your last dime to make a deal work.

If I was to buy a house from someone who is asking for too much earnest deposit, could I lower my offer price to make up for the bigger earnest money deposit?

The lower end duplexes have even higher rent ratios but I wouldn't really want to manage those from afar.