Then, once each rental is done this way and applied to income or debt, they are going calculate your DTI and qualify or deny you based on the DTI requirements of that particular loan program (28%, 30%, 35%, 40%, 60+% back in 2005, whatever).The above underwriting method is know as "washing" the debt of each rental property with its income.Another way that they do it is they simply take the PITI of each property straight to the debt, and the rental income from each property straight to the income (usually also reduced to 75%); rather than washing it first.It is advantageous to the borrower's qualifications to "wash" the PITI with the rental income and then apply the remainder, whether positive or negative, to income or debt. 

.- As a last ditch scenario, if I can only secure 1 property for whatever reason, I'd put the entire $140k into it, and get a mortgage on the rest (likely around $200k on the mortgage). 

It’s very unlikely to have been related to the home’s systems, since it’s a brand-new house.I believe I have a handle on how to proceed, but I’d appreciate any advice on how to handle security deposits with regard to cause, and tips on dealing with insurance.  

Also, have you tried those other methods like you?

@Graham Richard Anderson Search engine optimization and Google Adwords are by far the best lead generation methods.

I would like to supplement my FT corporate income with this method of real estate investing.

Don't forget about the security deposit as well - you may want to consider a pre-walk through before agreeing to CFK.

Totally agree with @James Wise on securing inspections, clear title and the default appraisals. 

Or are you more reserved and methodically and want to patiently start to invest?

@Michael HutchinsonHI Michaelwe just recorded a podcast with Bob Burg from The GO Giver and I asked him how people should try to secure a mentor.