There are sections of siding/soffit where the wood is rotting and needs to be replaced.

When I began tearing out the old floor about half of the wood was moldy and rotted.

It was build in 1977 and still had the original wood burning fireplace.

It isn't any great mystery that the issue is that the places are overpriced.Since you mentioned turn key places (which generally sell at a premium over other rentals) are going for less than your price there is noway you will sell them.I presume they need some amount of work and there isn't anything so amazing about them that they would sell about the market for rentals.  

@Brian Woods well said.

You mentioned fees but I'm assuming that is associated with the auction premiums.

If you are burning gas/wood/coal, etc, then you need both a vent (traditionally air from the room) and an exhaust (the chimney) - this is the draught you feel.  

All,I know this is a difficult question and depends on each investor's needs, but I'm looking for general guidelines for comparing REIT investments to actual real estate.If I can get a nominal 7.7 ROR investing in a basket of REITs, what kind of risk premium should I target for the trouble of being a landlord?

I might gather my courage and try it with some of our older houses where the wood floors are not in the best shape.Gail

This would add about 3500 in insurance premium to your mortgage balance (you may be able to pay the premium up-front rather than roll it into the mortgage)With an insured mortgage, if you were to go with a 5-yr term variable rate product, you should be looking at an interest rate between 2.4 & 2.7%.