The main factor likely has to do with the lack of access provided by the owner/tenants.

You need to look at a bunch of factors - ARV, GRM, DSCR, Cap rate, EM, CoC ROI and so on.

In 1998, he started Equity Lifestyle Properties (NYSE: ELS), the largest MHC REIT in the nation by market cap.

In my area I wouldn't buy a 1947 house with a basement water problem.I understand there may be other factors that may make this a good deal though for you.Obviously there are things you could do, such as ensure gutters are unclogged and draining away, or dig up all around the house and sand blast the outer walls and coat them and install gravel all along the exterior walls, or put in an exterior sump, or have trenches cut all around the basement perimeter inside the house to collect water and then pump it out, or you could even toss away some $ by painting the basement walls and floors with special thick paint, but why make any of those steps your problem?

It's a combination of several factors.

As far as whether you should move to a better RE investment market, you'll have to decide whether that's a good fit for you and your lifestyle.

Alternatively there are other lenders out there that will give you a loan even without credit or credit history, as long as you provide compensating factors.

The loan is factoring in rent from the tenants and when running your numbers, you need to include vacancies. 

Trust is a huge factor in my opinion.

Again you are looking at exterior factors.