Then, if the inspection uncovers an unknown, you can back out or renegotiate.

With any lender money is finite so you may find a blend of private and hard money lenders if you have multiple projects going at once. 

He's uses a formula uncovered 5 years ago while he attended an investor conference focused on identify "positive cash flow" properties.   

The only hiccup I've uncovered so far is a reverse mortgage on the property, which is well below the accepted offer.

They'll quote your properties through numerous carriers and find the best blend of coverage for the cost.

He has quite a bit of experience in buying and selling real estate himself as well so he should have some professional/personal insight.Also at this stage we are having them uncover the tank to ensure it is still there and at least start assessing the condition.

HI @Scott Gadea, the answer is:  Save more money ORInvest in a lower cost market Both are methods that people have used for years to generate great amounts of financial stability or wealth, but the latter is a wonderfully efficient arbitrage play AND many would recommend this because of the fact that your home market is a cyclical market and you'd be wise to build assets in linear markets, or at least hybrid markets that blend the benefits of the two.For more information on investing in real estate outside of your home base area, check out David Green's book Long Distance Real Estate Investing

That doesn't exactly answer your question, but it is information that I recently uncovered and found interesting.

They can uncover many of the hidden items your eyes cant see.

Though, a low down payment to lock in an owner occupied rate should not set you back too much if you wanted to blend the two strategies.