While it is important to assess risks and be prepared for the inevitable problems here and there, the whole purpose of investing in real estate is due to the exceptional upside overall.  

@Doug KienzleDon't forget to take property taxes into accountAround hear( Cook County, IL) anything below grade would not be factored into assessed value.

@Brian Van PeltThank you for your assessment.

The tax assessment was approximately $2k per year and now the owners also pay an excessively high monthly water bill. 

The as-is and ARV ratios are also important to assess lender risk and will drive your rate. 

An additional fee of $10.00 per day shall be assessed for each additional day Rent is late, until Rent is paid in full.

You get hit with land + improvements (the home) which are usually assessed at a value close to your purchase price + land with maybe even then some if the area has been rapidly appreciating.

I then went to the assessment website to get that information.

The biggest thing you need to watch out for is special assessments.

The problem is the property will not sell to buyers 50% assessed value.