I am currently in negotiations to purchase the worst building on the nicest street in a wealthy Seacoast New Hampshire town.

The most obvious but not necessarily the worst case scenario is: what if he places horrible tenants then declares bankruptcy on his "business"?

@Matthew Sprott Plan for the worst, hope for the best. 

Of all the properties not to do an inspection, a multi is the worst.

I figure if I run into a situation where I have to pay more than 20k for a major repair(s), then I can look into pulling out a business line of credit through the LLC as a worst case scenario (assuming the LLC has been in business long enough).

In general, you will find that North Minneapolis provides more challenges than other parts of Minneapolis, but the best areas of North will still be better than the worst areas of South Minneapolis. 

Worst case scenario, I would get paid first, even with the IRS lien, right?

At worst I’ll sit on the money just in case worst case scenario and I have to pay it back.

. :)Oh and for jumbo or portfolio loans, the worst-case average of 2 year of Schedule E income is likely what will go into the DTI (24 month average if income is trending up between the two years, 12 months if the more recent year had lower income). 

Every way I ran the numbers still seem like I would cash flow positive even in a worst case scenario (at minimum 500 a month) it’s just that we wouldn’t build any equity for a while (but we would probably hold onto the property for a long time anyway).