What assumptions am I making that are incorrect?

Though it would be irresponsible and incorrect to say "always". but that doesn't make it a good deal. positive cash flow alone is not the metric of a good investment. the return is generally better when financed as you have to use less of your cash and still maintain a large percentage of the income.

@Alexander Felice Thanks for the response but your assessment uses a lot of incorrect assumptions. 10 years of banking experience myself.  

I am not sure if @Edward B. is saying that if you have a homeowner or tenant policy at your primary residence it will also cover your rental's liability; that would be incorrect. 

But because Phil knows that if anything is done incorrectly along the way, you could get into a lot of trouble if accused of brokering Real Estate without a License, he justifies his 50/50 split of the many thousands of dollars profit that would otherwise be going to just you, by suggesting that he can give you the secret sauce that will allow you to not break those brokering rules.But I agree with Matt Jones' point. 

Sorry if this is the incorrect place for this topic.

Am a I incorrect in assuming that all the best deals are REO?

Please help us to keep forums organized and relevant by taking the time to place your post in correct forum.

@Karen Margrave Maybe I'm describing it incorrectly?

But I doubt this is the case from the sounds of it.I have purchased properties before where there were incredibly complex title searches, where multiple estates were involved, heirs died without a will, hand written deeds in the chain with incorrect or incomplete legal descriptions, etc. - and in instances like these, I've paid the closing attorney upwards of $1k - $2k just for his fee alone.