Then after 6 months or so when all the properties are stabilized, maybe lower that amount a bit if everything is running smoothly. 

Many of whom are able to lower their monthly living costs by house-hacking.

Great cash flow, lower entry prices.

It just adds extra expense and lowers your credit rating.B. 

Buy in either: - Established, affluent areas: Pacific Heights, Presidio, Cow Hollow, Sea Cliff OR- Tier 2 areas that might become more affluent: Mission Bay, Potrero, Dogpatch, MAYBE "Outer Sunset" (although yes - it's probably in a lower tier than the others) 2) Are we likely to make money if we invest in a cosmetic renovation of an older place or is the cost of labor and materials in SF likely to diminish our potential profits to a negligible amount. 

@Ben Granja, the above advice that a bank will lend 80% of lower of appraised value or purchase price is incomplete. 

FHA does not mean the value will come in any lower.

Could this be negotiated with a lender and would they be open to accepting a lower down payment?

Their rent to "all in" ratio is much lower than what I want, but somehow they use this strategy to get up to 100 houses.

You probably aren't going to find any markets in Maryland with a lower price-of-entry then Baltimore, so if "low budget appeal" is your driving factor then focus on Baltimore and maybe Dundalk.