For instance, risk of fraud, risk of default, risk of loss, extension risk, etc.  

I just learned about methane digesters, how cool would it be if large apartment complexes used food waste from residents to supplement heating costs!?

The other possibility is actual cash value, which is based on a market analysis and will be cheaper, but won't cover as much in case of a total loss.

You didn't necessarily save the lender from a huge loss.  

(No longer a great deal).We had no problem with getting the ernest $ back,and we backed out of the deal with only a $350 loss from the inspection report.

Your rent losses and repairs to fix the units up are very high etc.

So, if all your rental properties show losses (or not much income) then getting a conventional loan probably won't work for you.

That means that investors are entering the market for a quick flip, losing their money, and selling at a loss.- buy and hold would be my only option to invest in Detroit.

Here are the details.Asking Price $275,0008 Unitsbuilt in 1987All are 2 bed/1bathRent is $500/month per unitOwner pays water/sewer/trashFinancials:They were not provided in the listing, so I am estimating on some costs.Down payment $68,750Closings Costs $10,000 (estimate)Mortgage Estimate $1361/month (estimated 5 year balloon, 20 year amortization, 5% interest, 25% down payment)Annual Gross Rental Income $48,000 ($500/month * 8 units)Vacancy Loss $4800 (10% estimate)Adjusted Gross Income $43,200Property Taxes $3018 (2013 actual amount)Insurance $1500 (estimate)Maintenance $4320 (10% Adjusted Gross Income)Water/Utilities $5760 (estimate $60/month per unit)Property Management $4320 (10% Adjusted Gross Income)Net Operating Income $24,282Operating Expenses $18,918Annual Income $12,468Cash on Cash Return 15.83%Am I underestimating key costs here?

Another issue is an assignment of insurance loss proceeds, but her attorney should take care of that as well under an option.