The idea is that this will allow me to stabilize the property in year 1 without draining all monthly cash flow.Complication:The owner is interested in doing this, but there is a hitch.

Also, the maintenance on older homes can be a drain so just keep that in mind too. 

If these properties are draining your wallet, driving you mad, and not getting any better, no matter what you do, I think you're in a situation where you should consider dumping them.Any investor worth his/her salt, has probably experienced some failures.

I had a propriety inspector go over the place, plus I tested the drains before I made the purchase.

Vacancy, a major repair, etc... would throw any profit down the drain.

As the units were draining the drain hoses were just pouring into the floors and water was continuously running into them.

The pool was existing but we stripped it and added new plumbing, new drains, new plaster, new tile, new coping, and new equipment for a cost of approx $24k.

Depending on the situation this could require interior perimeter French drains and a new slab poured with appropriate insulation and vapor barrier.

I think like most buyers the ones that need the low downpayment FHA will buy as much home as they are approved for. with rents in many cases being as high as mortgage payments or close to it I think they make the wise financial decision to buy instead of throwing money down the drain on rent.I think bottom line though is 74% may plan to or desire to buy a home but it of course wont be that high  half of the US rents other half buys.  

There was mold in the kitchen behind the cabinets ($1,000), broken drain pipe in front yard ($1,700), electrical was not up to code ($700), carpet ($1,500), etc...