Your strategy is a consideration for comps, as the comps you seek are also the catalyst for the strategy.For a while, before being an RE Brokerage - I heavily relied on comps from RE Agents, I sought out a RE Agent that was interested in a JV exchange of information: I am a numbers guy, RE agent was my gateway to information, I would trade deal analysis for the Agents clients for comp data access, the RE Agent sold more, I was able to buy more - win win :) Other alternate means, is triangulating data - Redfin, Zillow, Realtor, Property Auditor - be critical of all information, define a timeline and zone, I prefer .5mi-1mi. radius and 6mos trending, some like to use up to 1yr

The reason gets into super nerdy insurance but the bottom line is you will be penalized heavily in a claim for underinsuring your portfolio. 

We're heavily invested in the stock market and I want to diversify some of that money into real estate.  

Thanks Nick, the heavily damaged short sale is in Indy not Ft.

The concept of a property making money made sense to me, but the idea of leveraging yourself so heavily seemed like a recipe for disaster. 

Additionally the seller could own many properties and have a master insurance policy at a much cheaper rate than what you can get owning a single property.Unlike in commercial retail NNN where the tenants reimburse for property taxes and other costs with a residential rental the landlord is basically getting gross rent so how well the owner controls costs heavily affects the bottom line.Landlord paid utilities for residential is another one you want to stay away from.

Most lenders that dont care about credit will be more expensive and heavily predicated on LTV.

Cal,I invest heavily in Allentown.

I just don't see how this would be a smart investment unless it was heavily discounted to account for any fixes that would need to be addressed.

That is, by definition, losing money.The terms she has proposed are heavily weighted in her favor, and better than she would get from an experienced lender.