While are margins are smaller we also have no vacancies, no property management fees and little to no maintenance costs.

The amount of gain up to the amount of depreciation (taken or allowed, whichever is greater) is subject to a tax on unrecaptured depreciation, currently your ordinary marginal tax rate, but capped at 25%.  

While the higher-end homes can allow for bigger margins, that alone doesn't qualify it as a "better" place to wholesale.

It allows me to preserve my margin, have the money to continue repairs and prevent an issue where the tenant becomes so below market that you lose them to raise rents to market level.

It defers the payment, we earn (marginal) interest on our funds, and we get 1% cash back on the card we use for business - just paying the insurance on our rental portfolio each year yields a decent return (and we self-escrow the funds for insurance, so the money is there to make the payments). 

Don't chase the highest/maximum/ideal profit margin. 

I've seen it said that mold, asbestos, lead, etc... just spreads the profit margins greater in a very good way!  

Regardless, if you are not risking any money on the deal start with high margins and work your way down...  

I disagree.CAP rates are of marginal truth or consequence for a SFR.  

It had a huge profit margin and mostly cosmetic work, priced very low even for an REO.