It may seem strict, but we are covering costs associated with what tenants leave behind.

It's a portfolio loan they underwrite and hold in house & have strict credit/DTI requirements (as they should) since they can leverage up to 95% on pure investment properties. 

Thoughts on why you (or anyone else) like to be more strict on that versus income? 

Speaking strictly for Texas and properties on the MLS.

As a Cap Rate is indicative of the risk involved in owning the property, you want to focus on doing things that make your investment less risky if a bank ever had to take over.You can make your investment less risky by doing some of the following things:- Convert all month-to-month tenants to annual leases- Implement strict minimum rental criteria- Add security cameras- Make large capital and preventative improvements (fix drainage issues, install water pressure regulators, replace old HVACs...you get the picture)- Essentially, prove with action that you are caring for the property on a long-term basisThe only way this is effective is if you document everything you are doing as well.

q2: Is the capital gains rules on living together the last 5 years strict.

Remember that the IRS has strict rules regarding SDIRAs, and any violation of these rules could result in penalties and adverse tax consequences.

Be cautious of cities that aren't proactive in job attraction; too much growth can lead to strict building regulations, affecting housing value.Other Factors- Favor cities with a crime index that has consistently decreased over a decade.- For appreciation, I look for a minimum of 2.5% YoY growth in median house values over the past 20 years but I don't use this explicitly in calculations.

Some places look like they are in really nice high-rise buildings with probably really strict rental/leasing terms from the HOA. 

See the statute to ensure strict compliance.