For my first deal, I would personally look for a property at a higher price point (nicer asset/neighborhood), needs work in the dollar amount of no more than half of what I paid for it (less room for error and mainly cosmetic items), and has a reasonable spread based on comps after taking into account all expenses on a 6 month hold (so I can at least try to break even should unexpected circumstances arise). 

The lender and the borrower negotiate the amount of the spread, which will be added to the base rate.

I've heard people talk about refinancing for a higher appraised value than what you bought it for and then you take the spread and pay back your hard money loan.

In my experience, commercial lenders offer on a spread based on their cost of funds and risk. 

If investing and residing in a small multi-family in either of these markets appeals to you BUTyou still can't get all the down payment or other money together(or you'd like to spread the responsibility and risk with a partner with different expertise),we should talk.I'll be in Phoenix in August and Vegas in October (and again late January-early Feb.) and am open to exploring such arrangements.

The more units you have, the more you spread your risk.

I'm wondering did you ever think about keeping mortgages on these properties so that you can keep your capital working across more markets and spread your risk?

Yes, what I mean is spreading your risk across multiple units vs 1-2 units.

@Paul WeldenGotcha are there any requirements that the payments be spread out over time or simply that 6 payments be made?

If you mix a large batch, spread it out in a container to give it more working time.