List price just lowered $359,500. 

So if you purchase and rehab below X% then you will not have anything out of pocket...I mean, you'll have closing costs and whatever...but it will be lower than the conventional option which will require 15% down no matter what. 

@Anthony Wick That makes sense, refinance with a bank to lower interest and do a 30 year?

Are people just accepting lower returns or negative cash flow?

If their program shows a lower valuation than what you've listed/applied for, they'll require an appraisal.Alternatively, you can ask them what value their program came up with and if you're OK using that number instead, proceed with it.

If she lowers it great if not move on

I would pay him back at a higher interest rate than he pays the bank, but at a far lower rate then any hard money lender would lend to me.

With only 1 or 1.5 bathrooms, there is also less mechanical things to go wrong which gives you a lower cost of operation vs. houses with more bathrooms.

schools are decent, crime can still be a problem in certain areas, and a lot of lower income people still have a problem qualifying for a mortgage.

I can restart the 30 year mortgage but with lower monthly costs, thus making our current rental bring in more cashflow without raising our current tenants cost.