I generally won't use a licensed plumber to replace a water heater, and as such, won't pull permits.As a counter-example though...yesterday we were replacing a water heater and a pressure reduction valve for a buyer after their inspection, and knew that the buyer/agent would be interested in seeing receipts/invoices.

As it turns out they've gotten a rent reduction every month since we started the system.  

If I get a strong candidate, and they ask for a reduction, I may go down $25 or so; $50 if it's a harder area to find good tenants.The PITA factor can't be ignored.

As your property increases in equity, the REO will tend to decrease (unless your net income keeps pace with the appreciation of your property and the principle reduction of any loans). 

However, one potential problem is if they they don't all agree, say one tenant wants to keep things the way it is now and two tenants don't mind signing a new lease with a rent reduction to allow for their own cable/internet, I don't want to end up doing both.Thoughts?

3.Reduce the purchase price by this amount.4.For the sake of assessing the deal only, count this price reduction as additional income that makes the COC and total ROI attractive.

In looking at these kind of decisions, I think you need to consider all of the potential advantages of longer term real estate investing: rental income, income tax benefits, loan principal reduction and potential appreciation.

For example, if the same property was sold two years after purchase for a $100,000 profit, 50% (assuming there had not been any reduction in the debt) of the gain, or $50,000, would be subject to tax at a rate of 15% (the current long term capital gain rate).

I would say the biggest thing to watch out for with Section 8 is rent reductions.

The properties are in Kansas City, KSNashville, TNLafayette, INIndianapolis, INSan Antonio, TXToledo,TXHow does the property tax reduction work.