You are also told to subtract PITI (at 1% of value) to determine worst case scenario cash flow, per month.I like the idea, but the the numbers seem a bit low, particularly compared to property value in my market (Cayman Islands).

I wouldn't say its the worst area but its in the middle of some bad one, I would say I think your overpaying for the area.

The fixed rate that causes this threshold to be crossed is your ARM max rate you can tolerate.Terms of each ARM differ, but you can take the worst case set of rate changes and determine how many years before your toleration rate can possibly be reached. 

-I didn't find out until after I'd purchased the home that this neighborhood is one of the worst Superfund sites in the US for soil contamination (lead and arsenic mostly from the old smelters).

This is often an overlooked consideration especially when buying the turn keys in the Midwest. How does your area compare? http://money.usnews.com/money/blogs/the-smarter-mu...

This is one of the worst written contracts I've ever seen, like by someone with no business training whatsoever.  

Again be honest, the worst thing that will happen is he will say no.

I can fallback on a credit card / loan in worst case scenario.

How do you stay up on your terrorism news, your "The NDP is destroying our world" news or the "Justin Trudeau is the hottest and best or dumbest and worst thing for Canada" news?

To make thing worst, few weeks ago the management company (new manager doing her inspection) found out that the place is in a  very bad shape.