However I'd much rather try to avoid precarious situations all together.

@Mark P.The most you could possibly make on this place is $135/month.Rent - PITI(principal, interest, taxes, insurance)... you are missing a fair number of other expenses that you have thus far been lucky to avoid.  

There are solutions for all of these -- yet no one will close on an occupied property if they can humanly avoid it.Maybe not for a first timer, but none of this means avoiding the property.

I will be sure to watch where I step so I can avoid piles of dung in the future. lol@John S.

If so, what steps did you take and any tips and pitfalls to avoid? 

Cash-on-Cash Return Cash-on-Cash, the popular real estate investing return, is explained including its meaning, shortcoming, and formulation...Debt Coverage Ratio (DCR) A ratio investors and lenders use to track and compare debt-related outcomes for rental property and measure financial risk...Gross Rent Multiplier (GRM) A quick and easy way to determine whether or not a property is priced in line with other similar-type properties...Internal Rate of Return (IRR) The time value computation that shows the ratio between future cash flows and initial cash investment as a percentage...Loan-to-Value (LTV) A computation related to mortgages that lenders use when financing investment property as a measurement of their financial risk...The Maximum Purchase Price Calculation A calculation investors can make to determine the maximum price they can pay for an income property to at least break-even and avoid a negative cash flow...How to Compute Net Present Value Net present value is explained along with its formulation and use in real estate investing...Profitability Index The time value computation that shows the 'proportion' of dollars returned to dollars invested rather than the amount...Rental Income Property Cash Flow A fundamental look at rental income property cash flow for those of you new to real estate investing...Sinking Fund Factor Know the amount you you must start setting aside on a regular basis now to cover a capital expenditure scheduled in the future...Tax MattersIncome Property Operating Expenses and the IRS Tax Code Learn what operating expenses should be included in a rental property analysis as well as what the tax code says about operating expense deductions...The Recapture Tax Real Estate Investors Face When They Sell The seldom expected recapture tax real estate investors expect to owe the Feds after they sell their rental income property....The Cash Flow After Tax Calculation How to calculate cash flow after tax step-by-step starting at the gross scheduled income...The Depreciation Allowance According to the IRS Tax Code How the IRS figures the depreciation allowance for investment real estate along with its concept, limitations, and formulation...Understanding Rental Property Depreciation and Recapture Tax Rental property depreciation allowance and the recapture tax associated with it are explained...AnalysisCap Rate or GRM?

Some HMLs have given loans on primary residences in the form of a HELOC as long as the reason was for a business purpose, which allows them to avoid certain usury laws depending on the state.  

But you'll have to pay a higher rate to avoid the balloon or ARMs.  

If I sold to him at $460k and he puts 10% down and pays me say 8%, he can buy it now, I avoid a realtor and all the expenses on the rental.

These options or any others that take the bank out of the equation are really the only way you can avoid the most basic issue here -- that you don't currently make enough monthly income.If you're not up to speed on all the concepts I've mentioned, then Bill is correct about a second point... listen to the podcasts... all of them.