It's a great option for now ... just please know what the future can hold and have a strategy in place for that.And if they're not paying their 1st mortgagee it could be that they're not paying the realty taxes and maybe they've let their insurance lapse. 

None were in flood zones so we have no flood insurance.

Will banks approve this and also allow for the mortgage insurance to be dropped from the loan?

Hi Connor, This is my understanding on this type of loan.The FHA Loan  is mainly an insurance program by the FHA (government entity) that allows low down payment on the purchase.

Or does this include insurance and taxes for the year.

I never write them without adding in taxes and insurance.

While I'm sure there's risk exposure here that I still don't fully understand, I was comfortable proceeding on that time horizon and for that amount, and eager to learn what I can from it (and especially from talking through it with more experienced folks like you).Also, thank you for clarifying on the "default" terminology, this is somewhat new territory for someone coming from the corporate/venture world!

Make sure you take into account all of the perks that come with a job; Paychecks, benefits, health insurance, access to printers, office supplies, etc. 

@Julie Belton, the cap ex, repairs and insurance expenses seem too low to me.

Right after you close get an insurance policy that protects you if there is a loss.