What even better is the seller started an one-year lease with a tenant this year and it fits the 1% rule and 12% cash-on-cash ROI and has an above 8% cap rate.

It's true in some cases but it ignores the 2 best opportunities for smaller investors that have the luxury of cherry picking:1) Stuff that doesn't fit their model.

A few questions are: What involvement or risk do the other two have in this process?

I have heard great things about Bigger Pockets and started listening to their podcast and want to be more involved on the site.

If you are building, they are not afraid of steps; here in Nashville new 3 and 4 story homes are going in (with roof top decks) so they can fit 2 on a lot and give them a view.

Reason is you could get involved in lawsuits based on something that the prior owner did, and the tenant decided to sue the LLC after your takeover.

Hi Dan, rentals are certainly a good strategy, but there's a lot of work involved before it becomes passive.

I am sure you will find someone who fits your criteria.

Does that mean that when I look at the $90,000 house and the numbers are close and the deal would make sense at $78,000 (that is, the numbers would all fit and give me results within the rules of thumb; 1-2% rule for instance) would one then offer what would work even if it seems quite a bit lower than asking? 

This method also fits with one of my personal values of leaving things better than how I found them.