Happens in bare lots quite a bit

People who have good income (baring unfortunate thing like divorce or medical bills) typically are responsible and have decent credit scores.

Apparently they purchased this property March 2016 and only began what I would barely call bookkeeping this past October, so I have 4 months of notes that cash, checks and money orders were received.

And a post or two on the subject will barely scratch the surface. 

This is a bare life estate.

Most states have bare minimum information and language that has to be included in lien documents in order to be enforceable, so you don't want to lose all your capital just because you didn't feel like paying an attorney $1000 to draw up documents protecting 100k+ plus in capital.

Hi @Matt BrowningNo repairs were needed at the time of purchase, but some items were very outdated (house built in 1996 - contemporary southwest style - think brass everything and faded pinks, off white ceramics, and oranges).

Large enough to handle the worse-case scenario (many missed payments, major damages) and still turn a profit. 10% would be the bare minimum. 

Option A and B are likely initially cash flow negative when you include vacancy, maintenance, Cap ex, miscellaneous. 

The decision was based on 1) what debt service ratio we could achieve on my income alone, which we felt was safer, and also 2) we felt that having higher cash flow (not very high, just not negative or barely positive) was the wiser choice since we intend to hold long term.