For instance if I am selling into a rising market that has been hot for some time I'd rather take that cash and pay tax on it with the thought of using it as capital for some other endeavor or to acquire more real estate later when the market cycles to a buyers market.Anyway, so on to the caveat.

The fixer uppers on MLS in a hot market are asking 90% ARV when they require tons of work.

Cash flow is still king and it will keep a newbie out of hot water if you focus on cash flow.  

We're concerned about the market being too hot, but it'll still be cheaper to own vs rent. 

Hello,The housing market in my local market is pretty hot right now and finding an investment property has been a challenge.

About two months later in June, we had a HOT and HUMID few weeks here in Michigan, and in the kitchen I started smelling a musty stench.

Have a cold one and chill out...So what you're saying is that your local market, which I presume you know well, is currently depressed due to storm damage in an otherwise red hot nationwide market.

The Air conditioning wasn't turned on before she came in and it was too hot (tried saving electricity no one in home). 

I still should be close to $200 a month and can plan for lower cap ex and maintenance since I am replacing everything buy the hot water heater.  

I hear slot of people talking about it.