We were only in business for a couple of months, had no tax returns or anything to show but proof of rental income. 

I've started looking for handyman referrals, you make a lot of good points.We currently use Cozy.com for listing, applications, and automated rent collection, and use SmartMove for background checks.

Problem is that sellers want proof of ability to pay in order to avoid tire kickers, which is quite understandable. 

This is a  "Subject-to" transaction, hopefully using two notes.A seller is willing to take I/O for 20 years is probably 1 in a thousand and they will be taxed just as Greg is, make that 1 in 10,000.I'd bet Greg doesn't mention the other issues with a Sub-to, foreclosure, Greg can only foreclose on his interest, that could be paid off, the note to the first seller is pretty worthless, that can end up going to the state in a medical issue, then there are risks of bankruptcy, law suits by other parties, collections and servicing, deed transfers, insurance, liens and the list goes on, which is why you should not do long term subject-to deals.      

But it wouldn't be recession proof.

I don't want to collect any money from the tenant for the application since its a mess with returning it to them if we don't accept them.  

http://nypost.com/2015/07/18/obama-has-been-collecting-personal-data-for-a-secret-race-database/

@Karen Margrave - no I wasn't going to be collecting an agent's commission for buying the house.

He continued to explain that he didnt like these kind of cases because there was no police report and no other proof except what his client said.

I'm not sure if every collection attorney is as well organized as Linebarger law firm when it comes to maintaining those records.