If are likely to have people with credit, savings, and/or stable incomes (social security or pensions) you can more easily enforce strict rules and penalties for late payments. 

Cash on Cash ratio with some standard assumptionsBased on collected data, my rankings are:OH (Cleveland, Columbus, maybe Cincinnati): affordable, good population and economic growth, 16-20% rent to value ratioNC (Durham, Raleigh and Charlotte): less affordable but high population and economic growth, stable median home values and decent rent to value ratioGA (Atlanta): this is right in between OH and NC.

This is a grey area and there are many class action attorneys just looking for some juice.

It will work only if there is a stable tenant base. 

How politically stable is the country?

Typically not as much cash flow but the appreciation tends to be better over time and the rent growth as well.If you can afford it long term the better investment areas that have been stable for decades demand a serious look.

The comments on this thread are definitely giving me some perspective, and it sounds like we'll be better off focusing on a more stable area for our first deal.

And, they would still benefit from a stable stream of monthly income!

-- I suspect they have been doing very well on previous projects and they're squeezing the juice from this deal. 

or passive loss on sch e also offset w2 income?