Although it's not as important as Senior Lien status, determining equity doesn't necessarily drive the outcome of the deal but it can protect you in case of default.For either 1sts or 2nds you can also look at where the property is located to determine foreclosure timelines as well, which could be important in the event of a default.

Although you don't have to worry about the risk because everything worked out for you, the risk that you would take in such an arrangement is complimentary to the risk that the seller is taking in trusting the buyer to protect his credit by actually paying the bills and by not leaving him with a destroyed investment to have to sell if you were to default.  

How do you protect the windows?

Also non-recourse loans provide great protection. 

I am able to find deals that he can't. because he does not have the time to do so I feel I should make a contract to the realtor but should I give one to his investor also to protect myself?

As for the question about oil prices, I would agree with @Richard Spooner that Houston will not suffer this downturn as much as it did in the 80's due to so much more diversity in the types of industry that are now supporting the region.

Also, your reputation will suffer after enough of these fall apart.  

I'm sure the bank is constrained by privacy protection regulations, other compliance issues, and customer service reps who know and can only work in a certain "box" that does not include the situations investors like you and I face.One situation was a flip for me.

In consideration of Landlord foregoing the installation of a keyed dead bolt device on the back door of the dwelling and for consenting to the Tenants installing a “doggy door” in the back door of the dwelling at the Tenant’s own cost, Tenants hereby waive any and all rights and remedies they may have against the landlord for violations of the Texas Property Code and for any and all damages which the Tenants may suffer as a result, or in any way relating to, a keyed deadbolt not being installed on the back door of the dwelling or as a result, or in any way relating to, the allowance of a “doggy door” to be installed in the back door of the dwelling.

SF taxes are protected on the $72,000 by Prop 13 so that's all equity in your equity bank.SF  $72,000 + $4320 rents= $76,320SA     9,000 + $2160 rents= $11,160  Plus possible tax increase.You'd have to own almost 7 SA houses to match SF but then you'd have all the additional expenses of roofs and other CapEx.