Eventually, you will rely heavily on that local bank as you continue to grow and your traditional finance options decrease.

Property taxes are generally a function of assessed valuation not on rental income so it is understandable that some areas would not offer the value to buy and hold investors whose primary profit is from rental income not appreciation. where the 2% "rule" is achieved your tax will most likely be lower in relationship to your rent and as you rent decreases as a percentage of purchase price your tax will eat up more of your rental income.

But if that market decreases by 40% and I need to pull money out, it would take me at ~seven years to recoup those losses at a 10% return. 

Also, if their income is decreasing over time, your rents will decrease.

I can tell you that the learning curve will exponentially decrease from deal one to deal two.

@Hau Nguyen - Help me understand the numbers - you say Gross Rent's are $1,900/mo then you state your operating income is $1,620/mo - where's the $280 decrease stem from? 

These would specifically be problems for Flippers and Buy/Hold Investors For example, to prepare do you run the numbers for potential rental property based on percentage decrease in rent amount?

They are creating good cash flow, but the value of the homes are decreasing since they are in not so good shape.

The last numbers I heard were actually showing values decreasing in California and the Northeast.

Rents can decrease dramatically if the NOO units overtake the OO units causing rent wars.