I do not want half fast pluming jobs that lead to leaks and issues down the road so I am willing to pay a bit extra on this trade.

Betting its good old fashioned foundation damage.You will want to have not only an inspector take a look, but you might see if you can find a foundation company or structural engineer to check things out and get you a quote, because most inspectors will just tell you its a foundation issue and not provide any background on the scope.Foundation issues are common in Texas, every house you will come across will have issues to some extent.

Contact the county or local planning department to see if there are any issues with building on the property - bring donuts and make friends as these people will make or break you.If you are unsure of the borders of the property, then have the seller order a professional survey be done.If there is a Department of State Lands or similar in your region then find out about any special delineations on the property.Find out about power.

In my experience there is a lot of denial and shame in the process or they are under water and/or had some family/life issue.  

Dave - I too am interested but don't have the raw land development experience to fully jump in considering the wetland and flood plain issues. 

I think the issues that you are going to run into is that technically you incurred these costs before you started your rental activities and before you placed the property into service.

Here, even a lousy property with severe issues sells for more than we want to pay.

Then others hear about your compassion and bring their problems to you, expecting a break.You simply need to try and discuss this potential issue with your tenant if you don't already have something at least such as emergency contacts in place.

This means I will hit the limit of 4, after which most banks will not issue more loans (even though Fannie Mae allows up to 10).

HI Michael,the answer to all 3 is yes. since the properties are so close, one or the other would have to be a an Investment property. since this is your plan of action underwriting should have no issues as there is no means of mortgage fraud with what you plan to do. one thing you will want to keep in mind when qualifying for the new home is debt to income ratios, and having a renter with a signed lease agreement for your current primary lined up will off set the debt ratio helping you qualify with no troubles.let me know if you have anymore questions or want to speak privately!