I may be wrong though.

Regardless of who is "right" or "wrong", if the tenant/landlord relationship has deteriorated to thinking of terminating before the tenant ever moves in, then you as a landlord, and they as renters are just not a good fit.

Everything started off well, but then just when we thought there was nothing else to go wrong, something else would.  

Just take their word for anything that might be wrong with the property.To be a little less abrasive, look at it as a simple numbers game, is it worth the $400 to have someone who is working as an agent for you to inspect a $100K Home?

You say they are wrong but Kiyosaki recommends to use investments to pay for your bad debt if you must have bad debt.  

Perhaps I'm wrong about them. 

Any property that hangs on the market too long becomes ignored, people start to think something is wrong with it if others in the same price range are moving and it takes a big dip to gain attention......or take it off the market and let that perception die. 

That being said, the purpose of the post is to find out which market is best for me to direct my efforts, so if someone thinks that last statement of mine is wrong, I'm all ears.  

It appeared (mind you, I am still learning so I could be wrong on this) they paid around $209,000 for this property.

They ask for all my RE owned, name and account info for all my assests, all my other mortgages, etc.They are asking for %20 down, plus 2 points, plus a 1200 "application fee" for documents and inspection, @ 12% for 12 months.Is there something wrong here?