I would compare with other rentals in the area, if what you have know will give you top dollar than I would leave the kitchen alone, but if not, than I would compete with the others rentals by investing money into the kitchen and bathrooms. 

I never like to compare down but investing in anything is better than what most of Americans are doing on a yearly basis.  

So my question is are closing costs close to the same on a 25,000 dollar home compared to a 320,000 dollar home?

Sorry to sound so harsh, but purporting to be an altruistic for-profit Investor is fairly close to being an oxymoron in my dictionary.In reality, it's their LENDER who will decide how much they can be helped.If you're investing, why treat underwater properties differently to any other?

Plan: I live in a college town that is not friendly to the rental investor (rents are way too low compared to home prices).

I'd like to know about the number break down, risks/rewards, how to find investors that lend, how to find properties that both sides can be happy about, how this method compares to other low/no money down options, timelines, legal, etc...If anyone has any book or website recommendations please let me know!

I had to laugh about the property taxes compared to the valley.

This is possibly going to sound a bit harsh....You either need to hire a property manager or not be so emotionally tied to what tenants do or don't do.

Oftentimes my sellers are looking for something comparable to what they would have gotten in the form of refundable deposits if it were a rental, but instead in the form of nonrefundable option consideration.

Wow that sounds dirt cheap compared to what my LA attorney quoted, which included $300 just to buy a case # from court to put on the Summons, then $100 per TENANT to be served by registered process server (in my case 4 on the lease plus a couple john does!)