This provides temporary interest rate relief for the home-buyer, with the hope they'll be able to refinance to a lower rate in the next 1-2 years.Example:  A 2-1 temporary rate buydown in which a seller concession is made to 'buy down' the buyer's interest rate for a two year period (2% reduction in year 1, and 1% reduction in year 2, with the note rate taking effect in year 3).  

Also, once you get the rehab estimates, how do you figure what is a good asking price reduction to accommodate the needed rehab? 

Most larger management companies can negotiate a 10% reduction or something.

They can be hard to find, but very much worth their weight in gold when you do! 

I've personally bought on an option where my purchase price was set to be the mortgage balance at the time of exercise so that I benefited from principal reduction.

Value / closed prices not down, yet, but price reductions are almost equal to new listings and closed volume is down, with months supply up.

So my question is this… Do I eat the $800 reduction in monthly cashflow for a chance to get the line of credit, flip these houses, and pull out the cash?  

Good opportunity for you to press for a reduction given your circumstances.

I second @Samuel Eddinger on this - we have a very tight-knit community with CTREIA and networking locally will be worth its weight when just starting out your investing journey.

I'm sure it won't be close to 2007-2010 (when a $200k house came down to $150k), but how drastic of a price reduction are you predicting?