It's basically the hotel business with three turns a year.I can self-manage my A class SFR's in under 10hrs/year including everything and the equity is growing faster, not because of appreciation, but less wear-and-tear and tenants improving the property (e.g. landscaping).Obviously C class midwest props fall somewhere in between, but from a hold perspective, I just don't see too many management companies capable of creating equity through proactive management of the physical aspects of the property, particularly in these fringe markets.

The seller is even willing to reduce the asking price because of this issue.

Some short selling banks actually reduce the commission paid in dual agency situations.  

I do think it helps reduce the amount of tire kicking tenants that apply.How does everyone run their background and credit checks? 

If there is very low activity they either reduce the price, or perform minor rehab in an attempt to move the property - just like anyone would do when they have no choice but to sell a house. 

And since we only buy under value, we can (usually) get them to appraise high enough once the property has seasoned (usually a year) that we can refinance out our entire loan with a bank on the back end and substantially reduce our cost of funds.But with buy and hold (as with most real estate), finding capital is the hardest part.

I think your still fine as long as you are proactive about it.  

There are a few strategies that some use to proactively deal with such a utility situation.  

Bottom line-they saw I was an investor and back pedaled reducing the appraised value of my property and then reducing their offered loan to 60%.

I learned a lot my first signing and plan on doing my due diligence to be more proactive.