My first two rental home purchases were great CoC/IRR investments, but one could easily argue that I should sell one of those same properties because the cap rate is low (~8%), while the other is doing well (~10.5%). 

Nobody argued about it. 

It wasn't enough to argue about, but it certainly left a bad taste in my mouth as a client. 

Its hard to argue with the 500/month nets on a 30k property in middle america, where your making 6k a year on 30k investment.

Joe's brother-in-law buying Joe's house at a short sale would be a huge red flag for fraud.I think the biggest arrow in your quiver is #1, and your most probable path to success is to order a fresh appraisal with a fresh opinion of value, and once it comes back go to your (or the end-lender's) appraisal department (not the AMC, the lender's internal folks) and argue that the new appraisal is more credible than the previous one because of #1 ("if the appraiser didn't even go to the comps for a quick drive-by photo, who knows what else he didn't even actually do?")

I would also argue that you are missing out on an attractive asset class if you are only going to invest in "controlling assets" as you point out, it's a job, so large apts which are an attractive asset class are not attempted.

When I account for 10% vacancy, 10% repairs and maintenance, 10% CapEx and the numbers above I end up losing money every month.And I know I could argue that I don't need to account for capex/repairs and maintenance as it's completely rehabbed, but I have the understanding that the deal should cashflow anyways with that accounted for.

I am arguing that a high cap rate property is NEVER a higher reward.

Also Id recommend reading Ken McElroy's book the ABC's of Real Estate Investing.

I'm trying to connect the dots (not arguing or questioning) 🙂Thanks in advance