Every person will have different circumstances, different background, different resources available, different comfort level with different strategies, etc.

Ultimately is a balance between what you're comfortable paying to obtain the right person for the job.

As a result, you will run into some situations where they will hold, rehab and then sell at ARV.In this case, place an offer on the house you're comfortable with. 

Most tenants assume 1-months rent for Sec Dep is a given, so some don't even mind losing it; But if 2-months is the limit, that may be enough to motivate a tenant to care more than usual.And finally, become (somewhat) comfortable with the possibility the property will be used or abused at some point. 

The longer I am here, the more comfortable I get with the rent as is.

@Corey Beckwith Account Closed  Thank you everyone for their input on this I have my new offer in with 25% EM (all I am comfortable with at this point).

So my wife and I make more that enough to live comfortably but want to fast track our residual income. 

That was the first time I felt comfortable with it because of the added complexities when figuring out what the houses will re-sale for, plus the fact the price points are higher (though price points vary based on where in DC you are, of course).So if I were you, I'd check out Southern MD

$500-700 per month negative cash flow is a bit beyond my comfort level.

I think a few others above have said this before, but If you are concerned enough about having a questionable/sketchy tenant you should look elsewhere and find someone more qualified and you're more comfortable with.