@Joseph Asamoah is very successful with this strategy because he has a product with high demand and low supply (high-end, renovated single family houses in prime neighborhoods with 4-5 bedrooms), has put together a very thorough tenant screening process, and has developed deep relationships with key players at the local housing authority.

Contact a realtor to help we're a key role player in your success and we're free - the seller pays

I predict that a lot of players will be getting out of the business either because they don't like the small profits or because they bought in the hype and now they cant even cover their large mortgages. 

But, the entire premise here is that you will be able to refi as planned and scheduled, which means that the permanent financing player is fully involved from the get-go...And it doesn't stop there, because some times banks change their mind last minute - ask me how I know this :)Not to mention that your costs with HML will be very high, and terms will be quite rigid.

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It's vitally important to know who you are working with, and have the history of the players involved.

Hit up Net Worth and New Western, they are the biggest players in Houston.

I agree with your assessment but that doesn't mean qualified investors can't get better rates today due to the involvement of larger players.  

Go to local REI events and meet the players. 

Steve Brown Apartments and Forward Management are two of the largest players and often buy and hold everything from large apartment complexes to single family homes as they strategically buy entire blocks to tear down and develop large complexes.