@Lane Kawaoka $3k-$5k on a $3mm-$5mm property is extremely low, I'd be wary of such a study as it likely relies heavily on statistical sampling or computer modeling.

One person can give out mortgages to that first time home buyer, while the other rents out low income housing to families who struggle.

Most purchases to date are low end cash buys.

I would focus attention on what the actual rent would be.I think your taxes and insurance are way low.

Your transactions will not be as smooth as they would be with an agent that is doing 5 million a year in sales.That’s my biased opinion, but it comes from frustration of dealing with low volume agents that make life more difficult.

If the inspection results indicate no major fixes are needed, it will have that going for it, plus it's located in a low crime area, and the target tenant for this kind of residence is less likely to trash the place (B+ neighborhood). 

If ARV is 138, and it only needs cosmetic work, why is purchase price so low? 

This may really depend on your area and I have yet to test this out how well this will work in my market.Also check out this post from BP for other ideas- https://www.biggerpockets.com/renewsblog/2014/11/08/8-killer-resources-savvy-low-budget-wholesalers/ 

It might not be a scam - in CA there are very low rates on PM.My friend has a rental condo for $1850/mo and her PM fees are $76 flat.

The house that just sold that looks exactly like mine doesn't even have kitchen cabinets instead has shelves and I actually have cabinets and still find I'm getting low balled on the  appraisal.And to top it off there's a new home listing at the moment of another home in my neighborhood with the same layout of my house and is selling for 299,999 so why would mine appraised for way less??