Emotional usually equates to crazy.If you can work with them fine otherwise stay out of it.

Purchases with rent:value ratios of ~.65% or better and cap rates from 4.5-7% in the SD market tend to equate to fantastic long term investments.The LA market will almost certainly have slightly different figures, but I would have to imagine they are much closer to those  than the suggested national rules of thumb. 

If I can get numbers to $50/door ($600/month), that will equate to a 15% cash on cash return.

For a first time investor, there is more to the equation that ROI.

If you still have US real estate assets when you pass away your heirs will still benefit from the stepped up basis regardless of their residence so that shouldn't really factor into the equation.  

I want to get into a system where I train the tenants to understand that increases are apart of the equation.

Regular ROI typically also leaves appreciation out of the equation until you sell the property.

James:Yes, I'm sure area and rents will figure into the equation as well ... and bad spots in Detroit may be a little tougher than our bad spots.   

I've heard Ramsey bash guys on one side of this equation and other equally-successful guys bash his thinking as if it's got to be one way or the other.  

sounds like you have a great opportunity. i recommend the contact for deed route. as you mentioned you can get a lower down and more flexible terms. if you can get a 10-12 year ballon payment you should have no problem refi'ing out prior to that with a conventional loan and pay off owner contract. i would try to get the per unit down. you could try to show the total amount you would be paying when you add interest into the equation and see if he will come down on asking price, at least to market if not below. as well as play up the continued cash for with zero management headaches. ultimately if it cashflows well and you have good fixed debt for 10 plus years my experiences has been that price per unit is less of a factor. cash flow is king.