I would say doing good analysis of numbers = healthy bank balance = happy wife = happy life

@Aaron Smith,This is definitely a pretty specific scenario, and I think the Appraisals issue (and finding a Lender that won't require them) will actually be the biggest deal breaker.However, I don't think I'd let that stop you from investigating a specific Lender's options, since even if the properties will appraise for well under their fair-market ARV, a Private Hard Money Lender might be willing to work with you.We've even seen deals in hot markets get funded at >100% of the Purchase Price or As Is Value, based on a higher ARV & knowledgeable Borrower that still inspire confidence in everyone seeing a healthy profit.Your biggest assets will be the free & clear properties, and the existing rental income.The biggest potential issue I could see would be if your existing debts will require too much to pay off with the new Blanket Portfolio Loan, that you end up with not much cash-in-hand after paying everything else off.It's an interesting question & scenario, so I'm happy to discuss further.

I purchased in HI and equity has appreciated to a healthy level, however, I have only owned this house and lived in it for 18 months.  

@Patrick Boutin, if you become pre-approved for $400k (per your example), @Chris Mason was implying that you should aim for your PURCHASE price to be about half of that (so as to give you LOTS of "wiggle room" for the rehab costs that you're asking about).A healthy rehab budget can be your best ticket to (cleverly) add a LOT more value to a distressed property than the rehab actually costs.

Here is why I dont invest in Balto ( I stay in AA county )  Healthy Holly , building and permits are horrible , high water bills ( now being held for ransom ) , murder capital of the east coast , high insurance rates , lousy public schools , higher property tax rates , lower if any appreciation , declining population , higher car insurance , corruption in government .  

Most sellers are willing to sell their properties below market if they are in distress, but at an amount that will cover all these costs and still allow you to make a healthy profit on of that?

Long and short: I agree with your agent (but still encourage healthy skepticism).

I find it helpful to think of it similar to sustaining capital - you invest money back into your property replacing items like roofs, furnaces, etc to keep your investment alive and healthy and keep maintenance to a minimum.

If you extrapolate those numbers out for when you move out down the road, you'll have a very healthy cash flow and ratios.

@Jonathan Malnati@Joel Snipes This is starting to look like a healthy first-time group when you set the time and location don't forget to include @Sterling Cox in that message.