For lower price point properties you can get the same or better monthly net without having to worry about vacancy and turnover costs.

@Simon Lopez most policies can only go to $1M in Personal Injury, hence the need to buy an Umbrella policy.Check around for a lower cost Umbrella as there are options out there with premiums closer to $350-$400 for a handful of homes.

Do you honestly think a violent felony would score lower than an eviction?

Be very sure you have the right market rent, that you are asking them to pay the same as what they move to, or a bit lower. 

I can understand the desire to have a great cash flow and high ROI with no $$ in the deal, but I don't see the point in running your numbers based on that goal, and making a decision based on those number.....especially if your real plan is to put 20-25% down anyway......If you can find a place that cash flows well with zero down.....and isn't a BRRR deal, then that's pretty awesome6.5% ROI isn't "bad" .....its just not great.....there are other OOS places that have the potential to do better....but some of them come with a higher risk (lower class neighborhoods etc).

It's a solid middle to lower income area.

Also from the adds I’ve seen for these sorts of companies they say these lenders will lend at 4 percent or lower sometimes which is also unlikely

Going the FHA route is popular with the lower down payment needed, but also consider the occupancy requirement of having to live in the property for one year, and the inspection requirements being more stringent with an FHA loan.

If I can get him to lower 300 range plus holding the note at 6-7%, I can sell it as I won't refinance for at least 3 years, so he'll get the interest money but within 5 years so he'll eventually get paid in full. 

Value add to me are items that will actually raise rent or lower expenses that ultimately raise the NOI.- Reducing utility expenses through either separating meters or if you can’t, convert all fixtures to low flow.