Or does my ability to qualify for a mortgage for this type of situation decrease significantly while also increasing competition with other homebuyers?

As with any market, an landlords's success will depend heavily on their ability to attract, vet, and retain great tenants.

Making time, would just reduce my abilities as a doc/dad/husband right now, and isn't feasible, but I hope it will be one day.So I'll need to be somewhat passive.

Reasons are as followsThe cash flow margins are too thin for our businessIt's a guarntee that there will be a major expenditure that will eat/destroy the cash flow- I'd purchase the property with a home owners warranty to cover all mechanical systems.We'll take thin cash flow if there's an upside appreciation expectation or an ability to renovate & increase the value & pull cash out- There's none of that hereThe reasons I wouldn't purchase it are based on my current business plan, hence why I wouldn't do it. 20 years ago though I may have purchased this home just to get into the business.

The rest of the advice matches what I'm looking for and the good neighborhood portion in particular is a strong reason why I'm looking at a lot of the cities I am, the ability to get into good areas for good prices!

Things that we are trying to consider are:The ability to obtain a loan in the future (lower AGI from depreciation might hurt us) and recapture taxesI figured that if we sell an investment property, we would likely reinvest via a 1031 to defer our taxes, but would love some opinions on others that have gone through this and might be able to share their experiences for setting up a good foundation.Thanks so much in advance!

My ability to continue to get loans, is directly tied to these lease payments.How on Earth would I be expected to buy a new HVAC system when there is no money coming in?

He hasn't mentioned wanting to actively control it, though it is annoying to me that he wants to check up on me and he hasn't always been reasonable with me in the past, so I am wary of giving him the ability. 

@Wayne Brooks, I believe I read that somewhere about the ability to transfer to SMLLC as long as loan was originated after a certain date (within past few years).  

- Level of finish (even D-class properties can have different levels of finish)- Size of units- Specific Scope of Work- Your negotiating ability- Whether you will pull permitsAnd a whole bunch of other things...