To be considered income, to I have to be a registered contractor in Kansas and/or insured (if the contractors that actually perform the work are both of the above)?

a 30-40% increase wouldn't be so terrible that it eats up all my cash flow, but it does decrease the returns a bit, but the property would still be performing.

The small bump in the interest rate on a 30yr is your "insurance" for being able to reduce payments in a financial crisis.But most investors will stretch out their payments as long as possible to maximize leverage and cashflow.

If you want a certain amount per month cash flow after accounting for all the expenses, then that will dictate the equity you cash out to give you the performance you are looking for.

Have you had a recent Windstorm mitigation survey performed? 

P.S. we put 1k Deposit paid $180 + 475 for appraisal and extension cost is 10$ per day starting tomorrow.

Thus far, our tenants are people separating from a long term relationship, leaving their parents' home for the first time, somebody here on temporary work assignment (which looks to maybe becoming permanent), somebody who just moved out here to take a new job and isn't sure of where they want to live permanently and somebody who is recently disabled, but is waiting for social assistance to come through and is living off of a 401k and needs to stay some place as inexpensive as possible to make her money stretch.  

I would like to start buying non-performing junior lien notes and I was wondering, with the financial crises far behind us, if anyone had a feel for what the supply of these notes will be over the next 1, 2, 3 and 4 years?

I just figured its already a stretch getting them 80k below asking price...

If covering water isn't typical for your market and the units are in demand you could consider switching this to tenant pay and improve the property's performance.