If so, how labor intensive is it to remove the smell and nicotine from the house (i.e. walls, air ducts etc), that is, assuming it's possible?

As you go, adjust your business plan as necessary.

Remember, your sales price is not all CG (sales - purchase - basis adjustment + depreciation recapture;  (the CPA will get this figure for you).

Remember that this is a very capital intensive business.

Make the offer at or below the current value of the home then spend the next few months making adjustments on the home to increase the value.  

Luckily, we had a REALLY good adjustable rate mortgage, and it went down enough to cover the difference, and we still made money.

Don't finance something you intend to hold long-term with money that balloons, adjusts, bubbles, etc. in a few years4.

I don't do it with my college rentals because they're already spoiled and feel entitled.My low-income tenants tend to be 'management intensive' so that rules them out.However, for the first time I did send a card with a $20 local restaurant certificate to one of my blue-collar tenants because so far they've been good tenants and good neighbors.But I'm sure I'll be punished for that somehow. . . .

I use a small local bank and get "commercial" loans. 5.75% with 1/2 pt, fixed for 5 yrs and then adjusts.

If the contract price is $150K and the appraisal comes in at $135K, you'll either have to drop the price to $135K or the buyer will have to bring an extra $15K to the table.For FHA loans, the appraisal will follow the property for six months, so going to another lender or getting a new appraisal won't help unless you wait six months.Now, you do generally have recorse if you think the appraiser chose poor comps or adjusted the values improperly.