I don't buy properties that require an HOA and the utilities are always covered by the tenant.So if I have a market that has 3B/@B homes for $100K the 1% figure I like to apply only tells me that the rent needs to be around $1000/month.When I find properties that fit that criterium, all the other important aspects start coming into play, but all the properties that don't meet the 1% are out.These other criteria include things like the quality of the schools, the distance to restaurants and shopping, the crime rate in the area, the stability of tenants, meaning how long are typical lease agreement.

I do it just to make sure I have covered by own A*@Good luck!!

So, do we get financing for just the $85,000(max offer) or $135,000 (to cover repair costs as well)?

Other options might include: getting an unsecured personal loan to cover the $20k, persuading a friend or family member to loan me the money, or cobbling together the money from random sources like credit card convenience checks and maybe a Lending Club loan.Problem is, while my credit is good and I have a decent amount of cash to work with, my income is low-ish and comes from four (!)

You can pay down mortgage faster if you want by contributing more to principal, or you can invest, or you have more room if forced to lower rent in a downturn and still hopefully cover PITI.

Make sure your cash flow can cover the mortgage and the payments on your HELOC (assuming this is the way you are tapping your equity).

I know it comes down to screening but if the home isn't in a favorable location, how hard would it be to market to decent tenants?

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If it is possible for you could start on a multi family home that is easier to get financing including the renovation but you have to live there one year but your tenant(s) could pay the rent that would probably pay enough to cover most if not all of your mortgage payment.It can work well to be a good investment if you keep it for longer term.  

I think the IRS Section 1022 covers this, go to irs.gov and search inherited property.