@Connor Kerr Section 8 can be a concern, but if she's been steady paying rent that certainly mitigates the concern. 

If they didn't the margins wouldn't be so high, but if you can gain a general understanding of construction and specifically construction costs, as well as understanding the market you are investing in, you can mitigate that risk dramatically.

I would say for the very first one mitigate risk as much as possible. 

They can also reasonably mitigate their risk with hyper-specific market knowledge.If your deal is that good, why not just partner with someone who has the money?

He can mitigate some of his losses that way. 

Inherited tenants coming with the property seem to be the biggest problem we have had but that can be mitigated by asking to receive the property vacant upon closing.Ultimately this is a numbers game and if your projected returns (adjusted for the actual risks in the market) are correct you should be just fine. 

I will also ask they to face shower head away from curtain to mitigate.

& Birmingham, Alabama you may want to check out but full disclosure, I am not an expert in those markets by any stretch but if you work the punch list below you should really mitigate your risks in pretty much any market you decide to invest in.Don't buy in the roughest neighborhood in the urban core.

Every state that I know of requires the landlord to reasonably attempt to mitigate the tenant's damages.

It's typically a liability mitigation tool, which has nothing to do with tax.