I may be able to obtain a conforming loan with about 5% down at 4.75%, and running the numbers, I'm seeing about a negative $400 cash flow per month (which I can tolerate for a few years, I'd guess).  

You must be prepared to supplement tenant's rent till you are ready to cash out.In your area investors develop very high risk tolerance and move forward hoping to get out before th emarkets change.

@Vincent Chen The best niche in real estate is based on your level of risk tolerance, access to funding, and personal investment style.

How long do you tolerate the cash flow situation you describe while hoping to avoid any big problems waiting on the appreciation to offset your thin or in the red rentals? 

His monthly cash flow tolerance might be $0 or even negative -$300.

Does that make sense to tolerate a negative cash flow for first two years?

Hope this helps (and I'm proud of you for not continuing on with a tenant who is unwilling or unable to keep her commitment to you...you would be surprise how many landlords tolerate it for years!). 

Church plant… PS I know that wasn’t what you was really asking so thanks for tolerating

There are tons of ways you can invest in real estate and it all depends on your risk tolerance and style of investing you would like to pursue.

A/B higher rent neighborhoods tend to have people that take care of their pets....etc etc.....Bottom line is your tolerance for risk vs reward.....