There will be some short-term pain but it will be overall healthy for the market. 

I needed a smile today - so, thank you.

When you want to start looking at multi-family let me know as I have some great leads with healthy ROI and NOI for hold or repositioning.

@Aaron Smith,This is definitely a pretty specific scenario, and I think the Appraisals issue (and finding a Lender that won't require them) will actually be the biggest deal breaker.However, I don't think I'd let that stop you from investigating a specific Lender's options, since even if the properties will appraise for well under their fair-market ARV, a Private Hard Money Lender might be willing to work with you.We've even seen deals in hot markets get funded at >100% of the Purchase Price or As Is Value, based on a higher ARV & knowledgeable Borrower that still inspire confidence in everyone seeing a healthy profit.Your biggest assets will be the free & clear properties, and the existing rental income.The biggest potential issue I could see would be if your existing debts will require too much to pay off with the new Blanket Portfolio Loan, that you end up with not much cash-in-hand after paying everything else off.It's an interesting question & scenario, so I'm happy to discuss further.

I purchased in HI and equity has appreciated to a healthy level, however, I have only owned this house and lived in it for 18 months.  

@Patrick Boutin, if you become pre-approved for $400k (per your example), @Chris Mason was implying that you should aim for your PURCHASE price to be about half of that (so as to give you LOTS of "wiggle room" for the rehab costs that you're asking about).A healthy rehab budget can be your best ticket to (cleverly) add a LOT more value to a distressed property than the rehab actually costs.

Smile and dial. 

The market is healthy in the entire nation if you are looking in good neighborhoods.

@Jonathan Malnati@Joel Snipes This is starting to look like a healthy first-time group when you set the time and location don't forget to include @Sterling Cox in that message. 

Right now, looks pretty healthy,  so banks  will  continue to lend.In many expensive markets, the real estate market is already "soft."