This business requires having a thick skin and not getting hung up on minor setbacks.

I believe the natural progression of business will take you where you are most suited if you just start.

They want investors to have 'skin in the game'.  

Those reserves would have been lost and in a free market the repercussions of the implosion would naturally be deflationary.

.- I think the Mortgage Interest $150 and Escrow/Taxes & Insurance of $50 would be on the Income Statement as they are expenses that are not capital in nature?

DefinitionsAs used in this subchapter --(1) The term "Bureau" means the Bureau of Consumer Financial Protection.(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.(6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Partly because I really want to see the place before they get in and "clean"...see the true nature of the mess. 

CONS:  You'll already have skin in the game (legal fees, inspection, time) to the tune of several hundred dollars, and if you find some issues and try and retrade with the seller (who, unlike you, has not spent a dime or any of his time) can tell you to go and pound sand.  

The rotten egg smell is an indication of hydrogen sulfide in the water which can occur naturally, but is very corrosive and can cause problems with plumbing and fixtures. 

It will be difficult for you to purchase an investment property without some skin in the game. 20% would be about standard for an investment property.