I'm looking for arguments that oppose debt-reduction, specifically in the type of environment we face today.How was your success or failure attributed to using/keeping debt on your books? 

Have read many horror stories online about FannieMae either rejecting your offer (even if full price) and then re-listing the property with a price reduction or at the same price.

Im actually seeing days on market  (vs no days on market)  and price reductions on a few properties, it is changing, My neighbor is a mortgage lender, she said the past month has been "normal" where as the past 1-1.5 years has been nuts. 

This analysis will show you where you are creating most of your value and you want to make sure that the estimates supporting your returns are good estimates.Note that the Rate of return on Loan Reduction for this property is 0%.

maybe that might be a reason you're getting a lot of inquiries but asking to reduce the rent.Since they don't even want to fill out the application, they're probably not serious candidates, and there's a big red flag.If a qualified renter ask me for a reduction, I tell them to sign a longer lease or a term favorable to me (such as 16-18 months instead of 12 months; with the last month ending up in Spring), then I offer a 1 time "bonus" of a couple of $$ on the LAST month of the lease. 

If there is any rate increase or reduction in available funds, your capacity to acquire another property may be effected too, so a bird in hand may be better than a smaller profit considering the time it will take to get back in the game where you were before you did this deal.

and right now, due to so much reduction in value, many investors would pass the insolvency test.2nd thought is really a question on this topic: does anyone know what Bob Diamonds course (Attorney X) is all about?

It appears she was only looking at the debt reduction in her returns assumption.  

In fact, a line in our PM agreement says they reserve the right to lease the property for as much as 10 percent under market and they will make an "effort" to communicate the price reduction to the owner.

"I feel like I'm taking crazy pills!"