Barring that, should I simply contact my 'potential buyers' and tell them I'm going to be supplied with low cost homes, then get in bids on some REO's and hope they are there to close?

 $30,000 in supplies plus your labor.  

Bandits signs make you stronger mentally because you are doing something that helps you get out of your comfort zone.

TX class A MF, there is up to a 50% difference.Looked at another way Vikram: if NOI is correspondingly lower, so will the value of the asset, keeping the yield unchanged. 10% on a $1000 NOI is the same yield as 10% on a $800 NOI, but each yields very different asset values.Values are driven by a multitude of factors: supply constraints, land values, SF home affordability, interest rates, capital markets, blah, blah....which impact the going in yield (cap rate) of a propsective investment.

Supply and Demand, yay capitalism.

How has the water been supplied for the last 30+ years and why does it now need to be connected to the city main?

Michael,A RE attorney is a crucial member of your team, but if you are speaking about a simple purchase and sales agreement (PSA), you can get the standard CA PSA from any realtor, online, or even at some local office supply stores.If you are speaking about some more complicated investment contracts needing an attorney, then you should be coughing up the fee to make sure YOU are protected.I am glad to see my thread inspired you to stop the waiting, stop the sitting around, and take action.

The question will be whether the increased demand will negate the downward price pressure on rents due to unemployment, increased supply, etc.

This varies depending on how you structure your contract, but if that is what your contract says, then at the time you enter the contract, you will need to supply a 1% downpayment.

3) Can you supply utilities?