.- NYC properties appreciate higher than most parts of the country - of course, this should not be relied upon.

However, in a market like Indy, which is neighborhood to neighborhood and even street by street, you may want to familiarize yourself with some areas and do some analysis rather than solely relying on rent estimates. 

People rely on it because they are unwilling to do the hard work of learning how to get rid of tenants legally.

I know that some investors build up an OOS team over the years that they can rely on, so I want to know what ROI they have been getting and how much work they put in and how involved they are with their OOS properties.So even though there's no universal definition of "worth it" but the effort/risk you take should be on par with the return/benefit you get.

Interest only and rate is under 5%.So far, we've been personally funding the 25% down payments plus holding costs for every project, and have relied on private money for times when we are running cash tight.

Do proper due diligence instead of relying on this "rule"

Your lenders would prefer you take zero deductions, as it's best for them.Your best bet is to rely on a competent tax advisor who has a history of being able to execute.You might have some wiggle room by advantageously choosing between de minimis safe harbor or BAR rules, or by making an election to capitalize repairs and maintenance. 

Do you rely on your local agents or contractors to come up with a rehab estimate for each property that you analyze?  

And I created the strategy relying on the small banks to fund my investments.

It's our fifth SFH; but I"m abroad and will be relying on the seller and my PM.