So it's the marginal rate of new wealth that drives these markets.  

You'll want that margin of safety.

Also, if their business is that close to the margin that the $1K per year is the difference between profit and closing, how secure are you that they will continue to pay their rent?

Tommy, If you are wholesaling the income will be earned income (not capital gains), just like income received from a job and will be taxed at your marginal tax rate.

Take Gross Sales multiply by Gross Margin (here we use a 20-25% margin) subtract out expenses like Lease, Advertisement, Utilities, etc... then multiply by 2.

Example if 1500sf roof needs to be replaced you know in your area it will cost you $200-225 square you are taking about close to 5-6K, but as a wholesaler you show as re shingle in rehab estimate @cost of $1500, that is not doing justice to investor, I have seen 20 properties in last 2 months ,I purchased 2 of them both of them are going to run $10K more than their estimate, luckily both properties are in excellent areas , I will still make my margin, keep in mind I am also new as investor in Orlando Florida, , in Alaska we had several properties buy and hold , so I am learning too.

( Ex: Liens, or specific damages that are costly and can completely ruin my profit margin.) 7) And lastly any advice you recommend?

We also stick to the A+ neighborhoods of Portland and with that comes retail sales prices of 700K to 1 million once completed, which brings with it some great profit margins.

It's imperative to know what the density allowed is, the cost of developing the lots, building, marketing, financing, etc. and then after ALL the information is obtained, determine what the finished costs per unit will be, and what the profit margins will actually be.

This is often quoted as 80%, but some lenders will go as high as 85% if you have high gross margins and are experienced.