The Phoenix area has this potential too (5th largest city in America afterall), but I wouldn't plan on living off your cashflow in 3-5 years... especially if we encounter a recession.

No doubt you encounter some of these issues even with listed properties, but maybe just not as frequently?

You likely won't encounter major vacancy issues and you can always reduce the asking rest to fill vacant units.

Dial for dollars until you encounter a local lender that can spell the words "delayed financing exception" without the use of google or a spell checker.https://www.fanniemae.com/content/guide/selling/b2/1.2/03.html#Delayed.20Financing.20Exception 

We figured that chances were very low of encountering a burned down condo or one with extreme structural issues.

Also, for C- areas you should be getting 1.5%+. 1% does not build in enough reward for the risk and hassles you'll encounter with tenants and property maintenance (they're mainly all older homes with varying degrees of deferred maintenance).

Has anyone encountered this? 

While your not likely to encounter a lot of damages on a new home, it can happen and you never know if it's a cheap water heater or a major pipe burst.

Thank you guys for all of the replies and help I'm not going to let this hinder me I was more so wondering what other people have done in this situation or have encountered it before.

What are the typical issues that you've encountered and how do you avoid it?