I would probably not do this method because I am a dog lover however i must admit it would be highly  effective  .

Therefore you effectively have no debt at all.

You can go after multifamily buildings that are at 50%.Buy with cash and turn around and hold long term for cash flow.You can refi the equity out tax free to pursue more properties.When 50% occupied you can turn around some rentals with cash coming in.Multifamily short sales are good because generally by the time a bank takes REO it is vacant or near vacant and too much damage has occurred.For example buying a property of 100 units that is 50% occupied and paying say 10,000 a door for 600 in rent and needing 3,000 a door in repairs is better sometimes than buying a completely vacant property for 4,500 a door but needing 12,000 a door in repairs with no income coming in.With your 5 unit built in 1925 how much land is that??

Bed bugs brought in, damage, etc.

Fix the problem, replace any damaged insulation, spray with shellac and move on.

If someone sells the same property to two different people, (effectively what's going on here), the first one to record their deed wins.

However interest rates are so low and as I am toying with 15 year mortgages a big chunk of my mortgage payments would be paying down principal from the start, and it seems like this should play some effect when considering returns.

Agreed, might suggest you look at doing business in the 50,60,70 range as there are motivated sellers and you might consider options and flipping them, that is no more brain damage than an 8K property and probably less......IMO

How does he 86 tax law effect you?

Even saying you have an experienced property manager only adds limited credibility, as PM's have to be effectively managed, and many fail or fall into mismanagement themselves.