They are far too labour intensive and time consuming to hold for what is basically low returns per door.

Very little new construction as well, so if you're looking for buy2rent properties with/without rehab, you could do pretty well b/c our inventory of HGTV-ish rentals is pretty low. 

Zillow will have to operate these transactions with low cost of capital and it is unclear how they will do this.

IE west coast high priced compared to rust belt areas were homes are rentals are priced like used vehicles.. but even those low value assets will have running costs that will exceed cash flow many times..  

They seem quite low to me. 

The security of fannie is what allows for such a low (25%) amount of equity. future investment properties will continue to fall in this 25% bracket I think you can buy a higher rate and do 20% down for the first few, but with rates rising that won't be as lucrative anymore.

Their “ROI” figures are low at 5-7% even for the lesser cities, and on closer inspection these ROI numbers do not represent a reasonable cap rate, which would be even lower.

Low property tax rates.

I am wondering, if you were looking to buy a package deal of 3-4 properties consisting of ~15 units and the owner was willing to seller finance with low money down, would you pay close to market value?

Your best best would be to invest in places like Bloomington IL or Champaign where the prices are low and the crime is relatively low.