There is a 750 hour rule to qualify for Real Estate Professional status.  

The swimming pool was shut down by the health department.

Be careful you aren't violating fair housing - discriminating on familial status is prohibited. 

I understand the health and safety issues in renting and the town has an interest in protecting tenants and their rights.

Most programs don't allow more than 15% of the units to be late on their HOA dues as a sign of the HOA health.

@Roxanne Baisden it stands for Health Savings Account.

That said, you can typically buy them at better yields, but you need to be prepared to deal with defaults.My advice would be to start with performing assets which are under professional licensed servicing and where a complete pay history can be provided which shows consistent payments and loan status is current. 

As long as you are taking immediate action and communicating status frequently with the effected tenants, you should be good to go.As a gesture, consider a gift card at the local grocery and be sure to sayThank you for your cooperation and understanding!

Health and safety code?

If the appraisal comes in below the purchase price, then you would need to make up the difference (thus his comment about 25% could become 30% to make it work).Also, the property needs to not have any health/safety issues, which is probably what he was really referring to.