Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune.

Does it mean its a bad deal? 

It's more numbers than which neighborhoods.Keep in mind that Realtors really can't tell you this is a good place and this is a bad place. 

That doesn’t mean they’re bad tenants—many are just trying to provide stability for their families—but it does mean you need to be extra diligent with screening.

If you were able to pull out $500,000 in existing equity out of a paid off rental and disperse those funds to acquire 2, 4-unit MFR properties and had the income to support any future CapEx and the interest payments on your HELOC ( including the extra income to paydown the loan ) would there be any " gaps " or problems I'm missing in this situation where it would be a bad enough idea to not go through with acquiring more properties through a HELOC on 1 of 5 properties you own?

It's normally the desire for immediate income that steers most investors towards bad investments because they are hyper focused on cash flow which is often portrayed differently in spreadsheets than in real life, and should be a consideration but not deciding factor.

There are going to be some very small pockets you'd probably want to avoid, but even those aren't that bad compared to other cities' bad areas.

Besides, anybody can just come and take whatever they want, I would not have any proof.I would like to get my keys back by giving them a legitimate reason without getting our relationship gone bad. 

@Roger Garner all of the above give you great ways to find GCs, but HOW will you screen the bad from the good?

This would likely be a bad investment in your position.