The housing market these days is outdated and inconducive to quality living.

And you only get charged on the HELOC on the money outstanding. 

For example if the loan is $100,000 you may pay 3%, so your balance outstanding starts at $103,000.

The quality of tenants moving currently are well above average.

Go with your gut here . . . the quality of a note lies in both the collateral and the borrower, so if due diligence was skipped on either it would be a shame.

All in all, while the numbers work out, is the quality of the tenant pool and the market in this area valid cause for concern? 

If you come across a property that is already tenant occupied with quality, on-time paying tenants, it could be that the owner just doesn't want to manage the property anymore and they want to cash out.

The garage is not a health or structural issue and I always point that out during open house viewings so there are no surprises, so I can deal with that being a manual process long term, but I do need to have the air quality checked in the unfinished basement so that if a potential tenant ever did bring up that point, I will already have inspection info present or know what avenues to take if a new inspection is required.

You trust your new 'team' on the ground.You have no idea how to manage a property with the low quality tenants.You buy in an area no PM will manage,You hire a PM that takes what little money is paid for rent for expenses or fees.What can not go wrong?

First you need to decide what quality of tenants you want to market to, then improve the home to appeal to those people.